<PAGE>
                                                                    Exhibit 10.5

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.




                       COLLABORATION AND LICENSE AGREEMENT

                           dated as of March 17, 2006

                                 by and between

                             PTC THERAPEUTICS, INC.

                                       and

                                 ESSEX CHEMIE AG
           (a wholly-owned subsidiary of Schering-Plough Corporation)
<PAGE>
                                                               EXECUTION VERSION

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         Page
<S>         <C>                                                                                          <C>
 ARTICLE 1  DEFINITIONS.............................................................................     1

 ARTICLE 2  RESEARCH PROGRAM........................................................................     18
       2.1      Collaborative Research..............................................................     18
       2.2      Conduct of the Research; Allocation of Responsibilities.............................     18
       2.3      PTC Research Efforts................................................................     19
       2.4      Schering Research Efforts...........................................................     19
       2.5      Research Funding; Responsibility for Costs of the Research Program..................     19
       2.6      Disclosure of Facilitating Research Technology......................................     20
       2.7      Information Regarding Collaboration Compound........................................     20
       2.8      Extension of Research Term..........................................................     21
       2.9      Material Transfer...................................................................     21
      2.10      Exclusivity.........................................................................     22
      2.11      Subcontractors......................................................................     23
      2.12      Termination of Research Program.....................................................     23
      2.13      Testing of Active Compounds Identified by PTC Outside of the Research Program.......     23
      2.14      Allocation of Active Compounds......................................................     24

 ARTICLE 3  JOINT STEERING COMMITTEE................................................................     24
       3.1      Creation and Structure of the JSC...................................................     24
       3.2      Meetings............................................................................     24
       3.3      Responsibilities of the JSC.........................................................     25
       3.4      Subcommittees of the JSC............................................................     26
       3.5      Decisions of the JSC................................................................     26
       3.6      Limitation on JSC Authority.........................................................     27
       3.7      Project Leaders.....................................................................     27
       3.8      Project Team Access.................................................................     27
       3.9      Reports to JSC......................................................................     27

 ARTICLE 4  DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS..................................     27
       4.1      Responsibility for Development; Diligence...........................................     27
       4.2      Responsibility for Development Costs................................................     30
       4.3      Development Plans...................................................................     30
       4.4      Ownership of Development Data and Other Know-How....................................     30
       4.5      Access [**].........................................................................     31
       4.6      [**]                                                                                     31
       4.7      Responsibility for Commercialization................................................     31
       4.8      Meetings to Discuss Schering's [**] ................................................     32
       4.9      Manufacturing and Supply Responsibilities...........................................     32
</TABLE>


                                       i
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                                                               EXECUTION VERSION

<TABLE>
<S>         <C>                                                                                          <C>
      4.10      Regulatory Matters Related to Schering Viral Products...............................     32
      4.11      Regulatory Matters Related to Other Licensed Products...............................     33
      4.12      Impact of Change of Control of Schering.............................................     33
      4.13      Additional Reports and Information to be Provided Following Termination of the JSC..     33
      4.14      Certain Expenses of PTC.............................................................     34

ARTICLE 4A  DEVELOPMENT AND COMMERCIALIZATION OF DESIGNATED NV COMPOUNDS BY EITHER PARTY............     34
      4A.1      Designation of Designated NV Compounds..............................................     34
      4A.2      Development of NV Compounds by Schering.............................................     35
      4A.3      Development of NV Compounds by PTC..................................................     36
      4A.4      No Development or Commercialization of Collaboration Compounds in the Viral Field by
                     PTC............................................................................     36
      4A.5      No Development or Commercialization of NV Compounds in the Viral Field by Schering..     36
      4A.6      Applicability of Restrictions.......................................................     36

 ARTICLE 5  LICENSES                                                                                     37
       5.1      Research Licenses...................................................................     37
       5.2      Exclusive Development and Commercialization License to Schering.....................     37
       5.3      Co-Exclusive Research and Development Licenses to Both Parties......................     37
       5.4      Exclusive Licenses to Develop and Commercialize NV Compounds........................     38
       5.5      Right to Sublicense.................................................................     38
       5.6      No Further Rights...................................................................     39
       5.7      Section 365(n) of the Bankruptcy Code...............................................     39
       5.8      No Rights to Other Compounds........................................................     40

 ARTICLE 6  CONSIDERATION...........................................................................     40
       6.1      Up-front Payment....................................................................     40
       6.2      Development Milestone Payments for Schering Viral Products..........................     40
       6.3      Approval Milestone Payments for a Second Schering Viral Product.....................     43
       6.4      Sales Milestones....................................................................     44
       6.5      Royalties Payable by Schering on Sales of Schering Viral Products...................     44
       6.6      Compulsory License..................................................................     46
       6.7      Responsibility for Third Party Royalties............................................     46
       6.8      Limit on Adjustments................................................................     48
       6.9      Royalties Payable by Schering on Sales of Schering Non-Viral Products...............     48
      6.10      Royalties Payable by PTC on Sales of PTC Products...................................     48
      6.11      Royalty Reports and Payments........................................................     49
      6.12      Payments; Interest..................................................................     49
      6.13      Taxes...............................................................................     50
      6.14      Additional Tax Matters..............................................................     50
      6.15      Payment Currency....................................................................     50
      6.16      Schering's Records of Net Sales and Audits of the Same..............................     50
      6.17      PTC's Records of Net Sales and Audits of the Same...................................     51
</TABLE>


                                       ii
<PAGE>
                                                               EXECUTION VERSION

<TABLE>
<S>         <C>                                                                                          <C>
 ARTICLE 7  CONFIDENTIALITY.........................................................................     51
       7.1      Confidential Information............................................................     51
       7.2      Public Domain.......................................................................     52
       7.3      Legal Disclosure....................................................................     52
       7.4      Permitted Use and Disclosures.......................................................     52
       7.5      Public Disclosure...................................................................     53
       7.6      Termination of Prior Agreement......................................................     53
       7.7      Publications........................................................................     53
       7.8      Delay...............................................................................     54
       7.9      Confidential Terms..................................................................     54

 ARTICLE 8  REPRESENTATIONS AND WARRANTIES..........................................................     54
       8.1      PTC  ...............................................................................     54
       8.2      Schering............................................................................     55
       8.3      Knowledge of Pending Litigation.....................................................     55
       8.4      Additional Representations and Warranties of PTC....................................     55
       8.5      Additional Representations and Warranties of Schering...............................     56
       8.6      Disclaimer..........................................................................     56

 ARTICLE 9  INTELLECTUAL PROPERTY...................................................................     57
       9.1      Ownership of Disclosure of Program Inventions.......................................     57
       9.2      Assignment of Program Inventions by Employees, Agents or Independent Contractors....     58
       9.3      Patent Prosecution and Related Activities...........................................     58
       9.4      Cooperation; Request to Responsible Party...........................................     59
       9.5      Election Not to Prosecute...........................................................     59
       9.6      Third Party Infringement............................................................     60
       9.7      Infringement Claims by Third Parties................................................     61
       9.8      Certification Under Drug Price Competition and Patent Restoration Act...............     62
       9.9      Listing of Patents..................................................................     62
      9.10      Diligence with Respect to Marketing Exclusivity and Patent Term.....................     62

ARTICLE 10  INDEMNIFICATION.........................................................................     63
      10.1      PTC.................................................................................     63
      10.2      Schering............................................................................     63
      10.3      Procedure...........................................................................     63

ARTICLE 11  TERM AND TERMINATION....................................................................     64
      11.1      Term................................................................................     64
      11.2      Schering's Unilateral Termination Right.............................................     64
      11.3      Termination for Cause...............................................................     64
      11.4      Termination for Insolvency..........................................................     65
      11.5      Additional Terminations.............................................................     65
      11.6      Early Termination of Research Program...............................................     66
      11.7      Consequences of Certain Terminations by the Parties.................................     67
      11.8      Consequences of Certain Terminations by Schering....................................     73
</TABLE>


                                       iii
<PAGE>
                                                               EXECUTION VERSION

<TABLE>
<S>         <C>                                                                                          <C>
      11.9      Effect of Termination and Expiration................................................     74
     11.10      Survival............................................................................     74

ARTICLE 12  DISPUTE RESOLUTION......................................................................     75

ARTICLE 13  MISCELLANEOUS...........................................................................     75
      13.1      Governing Law.......................................................................     75
      13.2      Independent Contractors.............................................................     75
      13.3      Assignment..........................................................................     76
      13.4      Notices.............................................................................     76
      13.5      Force Majeure.......................................................................     77
      13.6      Advice of Counsel...................................................................     77
      13.7      Further Assurances..................................................................     77
      13.8      Severability........................................................................     77
      13.9      Waiver..............................................................................     77
     13.10      Complete Agreement..................................................................     77
     13.11      Use of Name.........................................................................     77
     13.12      Headings............................................................................     78
     13.13      Third Party Beneficiaries...........................................................     78
     13.14      Consequential Damages...............................................................     78
     13.15      Counterparts........................................................................     78
</TABLE>


                                       iv
<PAGE>
                                                               EXECUTION VERSION


                       COLLABORATION AND LICENSE AGREEMENT

         THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement"), dated as of
March 17, 2006 (the "Effective Date"), is entered into by and between PTC
Therapeutics, Inc. with a principal place of business at 100 Corporate Court,
South Plainfield, NJ 07080 ("PTC"), and Essex Chemie AG, a corporation organized
under the laws of Switzerland and a wholly-owned subsidiary of Schering-Plough
Corporation, with a place of business at Weystrasse 20, CH-6006 Lucerne 6,
Switzerland ("Schering"). PTC and Schering are sometimes referred to herein
individually as a "Party" and collectively as the "Parties".

                                   BACKGROUND

         WHEREAS, PTC and its Affiliates possess proprietary technology and
know-how related to the discovery, identification and/or synthesis of small
molecule drug candidates that inhibit the Hepatitis C virus ("HCV") by
modulating (either directly or indirectly) the function of the HCV internal
ribosome entry site ("HCV IRES"), and have identified certain chemical compounds
that are inhibitors of HCV; and

         WHEREAS, Schering and its Affiliates are engaged in the research,
development and marketing of products for the treatment of, among other things,
HCV and other viral diseases; and

         WHEREAS, PTC and Schering desire to collaborate in the discovery,
development and commercialization of Collaboration Compounds (defined below) for
use in the treatment of diseases and conditions in humans and animals, all as
set forth herein.

         NOW, THEREFORE, PTC and Schering, intending to be legally bound, hereby
agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         1.1 "Active Compound" means any compound that (x) [**] at a
concentration of [**] and (y) does not cause more than [**] [**], or such other
appropriate assay as may be mutually agreed by the Parties) at a concentration
that is [**]. Active Compounds include Highly Active Compounds.

         1.1A "Active Ingredient" means, with respect to any Collaboration
Compound, such Collaboration Compound, or any metabolites, prodrugs, solvates
(including without limitation hydrates), esters, salts, stereoisomers,
racemates, tautomers and polymorphs, of any such Collaboration Compound.

         1.2 "Affiliate" means, with respect to a specified Person, any Person
that directly or indirectly controls, is controlled by, or is under common
control with the specified Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the


                                       1
<PAGE>
                                                               EXECUTION VERSION


power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" shall be presumed to exist
if one of the following conditions are met: (a) in the case of corporate
entities, direct or indirect ownership of more than fifty percent (50%) of the
stock or shares having the right to vote for the election of directors, and (b)
in the case of non-corporate entities, direct or indirect ownership of more than
fifty percent (50%) of the equity interest with the power to direct the
management and policies of such non-corporate entities.

         1.3 "Back-up Development Candidate" means those Collaboration Compounds
that Schering accepts as suitable for progression to pre-clinical Development as
a Back-Up Development Candidate for use in the Viral Field in accordance with
its then current internal decision-making processes. It is intended that the JSC
develop criteria for a Back-Up Development Candidate that are based on knowledge
gained as a result of the primary Development Candidate selection, and may
reflect properties identified as desirable by the JSC given the strengths and
weaknesses of a Development Candidate, including, for example, enhanced potency,
better pharmacokinetics, structural distinctiveness, or patentably distinct
chemical structure. It is understood that PTC or the JSC may propose, and
Schering shall have the right to designate, Collaboration Compounds as Back-Up
Development Candidates even if such compounds do not meet all of the criteria
set forth in this Section 1.3 or on Schedule 1.14.

         1.4 "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in New
York, New York.

         1.5 "Collaboration Compound" means (i) the PTC Compounds, (ii) the
Schering Compounds, and (iii) any compound that is an Active Compound and is
either (x) first synthesized, or identified as a Viral IRES Inhibitor, by PTC or
Schering, or any of their respective Affiliates, or any Third Party working in
collaboration with or on behalf of PTC or Schering or any of their respective
Affiliates, following the Effective Date in the course of performing work under
the Research Program, or (y) claimed or covered in a Patent that claims a
Program Invention, together in the case of both (x) and (y) with any metabolites
and prodrugs, and any solvates (including without limitation hydrates), esters,
salts, stereoisomers, racemates, tautomers and polymorphs, of any such compound
that are themselves Active Compounds or are converted to an Active Compound in
vivo.

         1.6 "Combination Product" means any Licensed Product that contains or
comprises a Collaboration Compound and one or more active ingredients that are
not themselves Collaboration Compounds.

         1.7 "Commercially Reasonable Efforts" means (i) with respect to
Schering, that degree of skill, effort, expertise, and resources normally used
by an established pharmaceutical company and (ii) with respect to PTC, that
degree of skill, effort, expertise, and resources normally used by an
established biotechnology company, in each case with respect to a pharmaceutical
product which is of similar market potential at a similar stage in its product
life, taking into account the safety and efficacy of the compound or product,
the cost to Develop and Commercialize the product, the risks inherent in the
Development and Commercialization of the product, the competitiveness of the
marketplace, the proprietary position of the compound or product, the likelihood
of obtaining Regulatory Approval for the product, the potential economic


                                       2
<PAGE>
                                                               EXECUTION VERSION


return from the applicable product, and other technical, legal, scientific,
medical or commercial factors that such Party deems in good faith to be
relevant.

         1.8 "Commercialization" and "Commercialize" shall refer to all
activities undertaken relating to the pre-marketing, marketing, promotion,
distribution and sale of a product, and the process of Commercialization,
respectively.

         1.9 "Competitor" means a Third Party or any of its Affiliates which,
(a) together with its Affiliates, had worldwide annual revenues from the sale of
pharmaceutical products in excess of [**] Dollars ($ [**]) during its most
recently reported fiscal year, or (b) is engaged in the Research, Development or
Commercialization of a product for the treatment of HCV (either alone or in
collaboration with a Third Party).

         1.10 "Compulsory License" means a compulsory license under PTC Patents
or Schering Patents obtained by a Third Party through the order, decree, or
grant of a competent governmental authority or court, authorizing such Third
Party to Develop, make, have made, use, sell, offer to sell or import a Schering
Viral Product in any country in the Territory.

         1.11 "Confidential Information" means all data or other information
regarding a Party's technology, products or business, or its activities related
to Collaboration Compound or Licensed Product, which a Party considers
proprietary or confidential and which is disclosed to the other Party pursuant
to this Agreement. Disclosures of Confidential Information may be made by
written, graphic, oral, or electronic means, or in any other form.

         1.12 "Control" or "Controlled" means, with respect to any Patents or
Know-How, possession (whether by ownership or license, other than pursuant to
this Agreement) by a Party or its Affiliates of the ability to grant the
licenses or sublicenses as provided for herein without violating the terms of
any agreement or other arrangement with any Third Party. Patents or Know-How
that are licensed or acquired by a Party following the Effective Date and that
would otherwise be considered to be under the Control of a Party shall not be
deemed to be under the Control of such Party if the application of such
definition in the context of any license grants or sublicenses under this
Agreement would require such Party to make any additional payments or royalties
to a Third Party in connection with such license grants or sublicenses, unless
the other Party agrees to cover the costs of such license grants or sublicenses.

         1.13 "Development" means non-clinical (including, without limitation,
pre-clinical) and clinical drug development activities and related research,
including, among other things: conducting toxicology studies, statistical
analysis and report writing, conducting clinical trials for the purpose of
obtaining or maintaining Regulatory Approval (including, without limitation,
post-marketing studies) and regulatory affairs related to all of the foregoing.
Development shall not include Research or any study that is initiated after
receipt of Regulatory Approval for a Licensed Product and is principally
intended to support the Commercialization of the Licensed Product. When used as
a verb, "Develop" means to engage in Development.

         1.14 "Development Candidate" means those Collaboration Compounds that
Schering accepts as suitable for progression to Development (starting with GLP
toxicology studies) for use in the Viral Field in accordance with its then
current internal decision making processes. It is


                                       3
<PAGE>
                                                               EXECUTION VERSION


intended that Collaboration Compounds which are designated by Schering as
Development Candidates will meet a significant majority of the criteria set
forth in Schedule 1.14, as it may be amended from time to time by the JSC;
provided, however, it is understood that Schering shall have the right to
designate Collaboration Compounds as Development Candidates even if such
compounds do not meet all of the criteria set forth on Schedule 1.14.

         1.15 "Development Data" means all data and other information resulting
from the Development of any Collaboration Compound or Licensed Product following
the Effective Date, including without limitation, the results of any
non-clinical and clinical studies involving a Collaboration Compound or Licensed
Product.

         1.16 "EMEA" means the European Medicines Evaluation Agency, or any
successor agency with responsibility for regulating the Development, Manufacture
and Commercialization of human or veterinary pharmaceutical, diagnostic, or
prophylactic products.

         1.17 "EU" means the countries of the European Union, as they may exist
from time to time during the Term.

         1.18 "Exclusivity Term" means the period beginning on the Effective
Date and ending on the one-year anniversary of the expiration or termination of
the Research Term.

         1.19 "FDA" means the United States Food and Drug Administration, or any
successor agency with responsibility for regulating the Development, Manufacture
and Commercialization of human or veterinary pharmaceutical, diagnostic, or
prophylactic products.

         1.20 "Field" means the prevention, treatment or diagnosis of all
diseases or conditions in humans or animals. The Field consists of the Viral
Field and the Non-Viral Field.

         1.21 "First Commercial Sale" means (x) with respect to a Party, the
first bona fide arms length sale of a Licensed Product sold to a Third Party on
an arms' length basis in any country in the Territory by a Party, its Affiliates
or Sublicensees after Regulatory Approval has been obtained for such Licensed
Product in such country, and (y) with respect to a Third Party, the first bona
fide arms length sale of a finished pharmaceutical or veterinary product (in
each case in all formulations, dosage forms and packaging configurations,
including, but not limited to, as part of a combination product) to another
party (not an Affiliate or sublicensee of such Third Party) on an arms' length
basis in any country in the Territory by such Third Party, its Affiliates or
sublicensees after Regulatory Approval has been obtained for such finished
pharmaceutical or veterinary product in such country. Sales for clinical trial
purposes or compassionate or similar use shall not be considered to constitute a
First Commercial Sale.

         1.22 "FTE" means a full-time scientific or research/development person
dedicated by Schering or PTC (or their Affiliates, as applicable) to the
Research Program, or in the case of less than a full-time dedicated scientific
or research/development person, a full-time, equivalent scientific or
research/development person year, based upon a total of [**] hours per year.

         1.23 "FTE Rate" means [**] per full twelve-month (12-month) period per
FTE.


                                       4
<PAGE>
                                                               EXECUTION VERSION


         1.24 "Full Development" means the commencement of any clinical trial
for a Schering Viral Product after (i) demonstration of Proof of Concept with
respect to such Schering Viral Product or initiation of synthesis of clinical
material for use in a Pivotal Trial of such Schering Viral Product, and (ii)
completion of all GLP toxicity studies required to support the initiation of a
Pivotal Trial for such Schering Viral Product.

         1.25 "GLP" means the current good laboratory practices applicable to
the Development of Licensed Products under applicable Law, to the extent that
such standards are not less stringent than the United States current good
laboratory practice, including but not limited to 21 C.F.R. Part 58.

         1.26 "Highly Active Collaboration Compound" means any Collaboration
Compound that is a Highly Active Compound.

         1.27 "Highly Active Compound" means any compound that (x[**] at a
concentration of [**] and (y) does not cause more than [**] (as measured by the
MTS assay, or such other appropriate assay as may be mutually agreed by the
Parties) at a concentration that is [**].

         1.28 "IND" means (a) (i) in the United States, an Investigational New
Drug Application, as defined in the federal Food, Drug and Cosmetic Act, as
amended from time to time (the "FD&C Act"), and the regulations promulgated
thereunder, as amended from time to time, that is required to be filed with the
FDA before beginning clinical testing of a Licensed Product in human subjects,
or any successor application or procedure, and (ii) any counterpart of such
Investigational New Drug Application in any country other than the United States
in the Territory (e.g., a CTX), and (b) all supplements and amendments that may
be filed with respect to any of the foregoing.

         1.29 "Initial Research Term" means the period commencing on the
Effective Date and, subject to the provisions of Sections 2.12 and Article 11,
terminating three (3) years from the Effective Date.

         1.30 "Invent" or "Invented" means inventorship as determined by
utilizing the standards for inventorship for patent applications under United
States patent law.

         1.31 "Joint Know-How" means all Know-How that was developed by one or
more employees, agents or consultants of PTC or any of its Affiliates and one or
more employees, agents or consultants of Schering or any of its Affiliates
during the course of performing work under the Research Program. Joint Know-How
shall exclude Joint Patents.

         1.32 "Joint Patents" means all Patents that claim Joint Inventions.

         1.33 "Know-How" means proprietary, non-public information and
materials, whether patentable or not, including, but not limited to, (a) ideas,
discoveries, inventions, improvements or trade secrets, (b) pharmaceutical,
chemical and biological materials, products and compositions, (c) tests, assays,
techniques, data, methods, procedures, formulas, and/or processes, (d) technical
and non-technical data and other information relating to any of the foregoing,
(e) drawings, plans, designs, diagrams, sketches, specifications and/or other


                                       5
<PAGE>
                                                               EXECUTION VERSION


documents containing or relating to such information or materials, and (f)
business processes, price data and information, marketing data and information,
sales data and information, marketing plans and market research.

         1.34 "Laws" means all laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law or similar binding effect of
any federal, national, multinational, supranational, state, provincial, county,
city or other political subdivision, or any agency, department or bureau
thereof.

         1.35 "Licensed Product" means a Schering Non-Viral Product, a Schering
Viral Product or a PTC Product.

         1.36 "Major Market" means each of the United States, Japan, Germany,
France, the United Kingdom, Italy and Spain.

         1.37 "Manufacture" means all activities related to the manufacturing of
a pharmaceutical product, or any ingredient thereof, including but not limited
to test method development and stability testing, formulation, process
development, manufacturing scale-up, manufacturing for use in non-clinical and
clinical studies, manufacturing for commercial sale, packaging, release of
product, quality assurance/quality control development, quality control testing
(including in-process, in-process release and stability testing) and release of
product or any component or ingredient thereof, and regulatory activities
related to all of the foregoing.

         1.38 "Marketing Exclusivity" means, with respect to a Licensed Product,
any data or market exclusivity periods, including (a) the marketing or data
exclusivity afforded approved drug products pursuant to (i) Sections 505(c),
505(j), and 505A of the FD&C Act, and the regulations promulgated thereunder, as
amended from time to time, or its equivalent in a country other than the United
States, or (ii) the orphan drug exclusivity afforded approved drugs designated
for rare diseases or conditions under Sections 526 and 527 of the FD&C Act, and
the regulations promulgated thereunder, as amended from time to time, or its
equivalent in a country other than the United States, and/or (iii) any other
period of data or market exclusivity listed in FDA's Orange Book or a foreign
equivalent for a Licensed Product, and/or (b) the coverage of such Licensed
Product by a Law which precludes the Regulatory Authority in a country from
granting Regulatory Approval or accepting an application for Regulatory Approval
for another product because the application for the other product (i) references
a Licensed Product, (ii) seeks approval of a product containing the same Active
Ingredient as that which is contained in the applicable Licensed Product and/or
(iii) seeks approval of a product for a use for which the applicable Licensed
Product is approved.

         1.39 "NDA" means (a) the single application or set of applications for
approval and/or pre-market approval to make and sell commercially a
pharmaceutical therapeutic, diagnostic, or prophylactic product or delivery
systems or device filed with the FDA, including without limitation all
information included in Drug Master Files related to such application(s), and
any related registrations with or notifications to the FDA, and (b) any
counterparts to such applications filed with any other national or supranational
Regulatory Authority in the Territory, and (c) all supplements and amendments
that may be filed with respect to any of the foregoing.


                                       6
<PAGE>
                                                               EXECUTION VERSION


         1.40 "Net Sales" means, with respect to any Licensed Product, the gross
invoiced sales of such Licensed Product by a Party, its Affiliates and
Sublicensees to Third Parties, less the following deductions to the extent
included in the gross invoiced sales price for such Licensed Product or
otherwise directly paid or incurred by such Party or its Affiliates or
Sublicensees with respect to the sale of such Licensed Product:

              (a) bad debts actually written off which are attributable to sales
of the Licensed Product;

              (b) trade, quantity and cash discounts, and any other adjustments,
including, without limitation, those granted on account of price adjustments,
billing errors, rejected goods, damaged goods, returns, rebates, chargeback
rebates, fees, reimbursements or similar payments granted or given to
wholesalers or other distributors, buying groups, health care insurance carriers
or other institutions;

              (c) freight and insurance charges to the extent that they are
included in the price or otherwise paid by the purchaser;

              (d) customs or excise taxes, including, without limitation, import
duties, sales tax and other taxes (except income taxes) or duties relating to
sales;

              (e) any payment (other than a payment imposed as a result of
violation of applicable Law) in respect of sales to any governmental authority
in respect of any government-subsidized program, including, without limitation,
Medicare and Medicaid rebates;

              (f) [**];[**]distribution, packing, handling and transportation
charges for Licensed Product to the extent that they are included in the price
or otherwise paid by the customer;

              (g) [**]; and

              (h) [**].

The foregoing adjustments shall be consistent with customary accounting
practices within the selling Party and its Affiliates (or their respective
Sublicensees) and in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"), consistently applied.

The Net Sales from any Combination Product shall be determined by multiplying
the Net Sales of the Combination Product (as determined based on the definition
of "Net Sales" excluding this paragraph) during the applicable royalty reporting
period, by the fraction, A/(A+B), where A is the weighted (by sales volume)
average sale price of the Licensed Product which includes the Collaboration
Compound when sold separately in finished form and for the same indication in
the country in which the Combination Product is sold (the "Monotherapy Licensed
Product") and B is the weighted (by sales volume) average sale price of the
other product(s) which contain the other active ingredient(s) included in the
Combination Product when sold separately as a monotherapy and in finished form
and for the same indication in the country in which the Combination Product is
sold, in each case during the applicable royalty reporting period or, if sales
of both the Monotherapy Licensed Product and the other product(s) did not occur
in such


                                       7
<PAGE>
                                                               EXECUTION VERSION


period, then in the most recent royalty reporting period in which sales of both
occurred. In the event that such average sale price cannot be determined for
both the Monotherapy Licensed Product and all other products(s) included in the
Combination Product, then Net Sales for purposes of determining royalty payments
[**].

It is understood, however, that in certain countries in the Territory, a Party
or its Affiliates may Commercialize Licensed Products through a Third Party
distributor or agent under an arrangement in which such Party or its Affiliates
(x) transfer the Licensed Product to such distributor or agent at a fixed price
that is not necessarily related to the final selling price of the distributor or
agent, and (y) are not responsible for marketing and promoting such Licensed
Product in such countries and receive no compensation from the sale of such
Licensed Products by the distributor or agent. To the extent that such Third
Party distributors or agents would be considered "Sublicensees", the Parties
agree that the gross invoiced sales prices for the sale of the Licensed Product
by the applicable Party or its Affiliates to such Third Parties shall be the
price to be used for purposes of computing Net Sales in such countries.

         1.41 "Non-Viral Field" means the prevention, treatment or diagnosis of
all diseases or conditions in humans or animals, excluding the Viral Field.

         1.42 "NV Compounds" means Collaboration Compounds that are not Highly
Active Collaboration Compounds.

         1.43 "Patent" means all existing patents and patent applications and
all patent applications hereafter filed, including any continuations,
continuations-in-part, divisions, provisionals or any substitute applications,
any patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing.

         1.44 "Person" means any natural person, corporation, general
partnership, limited partnership, joint venture, proprietorship or other
business organization.

         1.45 "Pivotal Trial" means a human clinical trial that is designed to
confirm with statistical significance the efficacy and safety of a drug in a
given patient population, the results of which are intended to form the basis
for approval of an NDA by a Regulatory Authority.

         1.46 "Program Invention" means all inventions that are Invented by one
or more employees, agents or consultants of PTC or any of its Affiliates and/or
one or more employees, agents or consultants of Schering or any of its
Affiliates in the course of performing work under the Research Program.

         1.47 "Proof of Concept" means that the data from a randomized,
placebo-controlled study sponsored by Schering or its Affiliates demonstrates
that [**] In the event that Schering elects to initiate clinical Development for
a Schering Viral Product in an indication other than the treatment of HCV, the
Parties shall agree upon a corresponding definition of "Proof of Concept" for
such indication. For the avoidance of doubt, Proof of Concept shall be deemed to
have been met with respect to any Schering Viral Product for which Schering
commences all of those GLP


                                       8
<PAGE>
                                                               EXECUTION VERSION


toxicity studies referenced in Section 1.24(ii).

         1.47A "PTC Background Patents" means the Patents within the Control of
PTC either as of the Effective Date or thereafter during the Term, which are
listed on Schedule 1.47A, as may be modified by mutual written agreement of the
Parties.

         1.48 "PTC Compounds" means (i) compounds that are synthesized by or on
behalf of PTC or its Affiliates prior to the Effective Date and that are known
to PTC to be Highly Active Compounds as of the Effective Date, (ii) Active
Compounds that are either (x) synthesized prior to the Effective Date during the
course of PTC's medicinal chemistry program directed at viral IRES inhibitors,
or (y) synthesized or Invented by or on behalf of PTC or its Affiliates prior to
the end of the Research Term and claimed in a Patent (including without
limitation any patent application) Controlled by PTC as having activity as an
antiviral compound that inhibits the HCV virus by modulating the function of the
HCV IRES, or for which sufficient support exists in the written description of
such Patent or patent application to support a claim and there is the ability to
prosecute such claim, and (iii) any compound that is first synthesized by or on
behalf of PTC or its Affiliates prior to the end of the Research Term and is
both (a) identified by PTC or its Affiliates prior to the end of the Research
Term as an Active Compound and (b) identified as a Viral IRES Inhibitor in
accordance with the provisions of Section 2.13, together, in the case of each of
(i), (ii) and (iii), with any metabolites and prodrugs, and any solvates
(including without limitation hydrates), esters, salts, stereoisomers,
racemates, tautomers and polymorphs of any such compounds that are themselves
Active Compounds or are converted to an Active Compound in vivo. Attached hereto
as Schedule 1.48 is a list of all PTC Compounds believed by PTC to exist as of
the Effective Date; provided, however, it is understood that any compound that
meets the criteria set forth in this Section 1.48 shall be deemed to be a PTC
Compound regardless of whether such compound is identified on Schedule 1.48.

         1.49 "PTC Intellectual Property" means PTC Patents and PTC Technology
Platform.

         1.50 "PTC Know-How" means Know-How within the Control of PTC, either as
of the Effective Date or thereafter during the Term, which is proprietary to PTC
or its Affiliates and either (i) relates to the HCV IRES, to compounds that are
Viral IRES Inhibitors or that are Collaboration Compounds, methods of preparing
or using Viral IRES Inhibitors or Collaboration Compounds or methods of
treating, diagnosing or preventing any disease or condition using Viral IRES
Inhibitors or Collaboration Compounds, or (ii) is necessary or useful for the
Research, Development, Manufacture, use or sale of Collaboration Compounds or
Licensed Products and is developed prior to the end of the Research Term.
Notwithstanding anything herein to the contrary, PTC Know-How shall exclude PTC
Patents but shall include Joint Know-How to the extent Controlled by PTC.
Information within the PTC Know-How shall cease to be proprietary at such time
as it becomes publicly available, or otherwise becomes known to Third Parties
without an obligation of confidentiality, in each case other than through a
breach by Schering, its Affiliates or Sublicensees of the obligations under
Article 7. Furthermore, information within the PTC Know-How shall not be deemed
proprietary to PTC if it is (x) known to Schering prior to disclosure under this
Agreement, as shown by written evidence, or (y) is independently developed by
Schering or its Affiliates without the use of or reliance on any proprietary,
non-public information within the PTC Know-How, as shown by contemporaneous


                                       9
<PAGE>
                                                               EXECUTION VERSION


written evidence.

         1.51 "PTC NV Know-How" means, with respect to a Designated NV Compound
designated by Schering, any PTC Know-How which (x) relates to such Designated NV
Compound (or a Related Compound), methods of preparing or using such Designated
NV Compound (or a Related Compound) in the Non-Viral Field or methods of
treating, diagnosing or preventing any disease or condition in the Non-Viral
Field using such Designated NV Compound (or a Related Compound), and (y) is
developed prior to the date that Schering designated such NV Compound as a
Designated NV Compound.

         1.52 "PTC NV Patents" means, with respect to a Designated NV Compound
designated by Schering, any Patents Controlled by PTC, either as of the
Effective Date or thereafter during the Term, which (x) claim inventions that
are Invented prior to the date that Schering designates such NV Compound as a
Designated NV Compound, and (y) claim or cover (i) the composition of matter of
such Designated NV Compound (or a Related Compound), (ii) the use of such
Designated NV Compound (or a Related Compound) in the Non-Viral Field, (iii) a
method of treating, diagnosing or preventing any disease or condition in the
Non-Viral Field using such Designated NV Compound (or a Related Compound) or
(iv) a method of Manufacturing such Designated NV Compound (or a Related
Compound).

         1.53 "PTC Patents" means the Patents within the Control of PTC, either
as of the Effective Date or thereafter during the Term, which (i) relate to
Licensed Products, HCV IRES, Viral IRES Inhibitors, or methods of preparing or
using Licensed Products, Viral IRES Inhibitors, or methods of treating,
diagnosing or preventing any disease or condition using Licensed Products or
Viral IRES Inhibitors, or relate to methods or materials used for discovering,
identifying, or assaying for Viral IRES Inhibitors or Licensed Products, (ii)
contain claims that would be infringed by the Research, Development,
Manufacture, use, import or sale of Collaboration Compounds or Licensed Products
in the Field, and (iii) claim inventions Invented prior to the end of the
Research Term. The PTC Patents shall include the PTC NV Patents, as well as the
Joint Patents to the extent Controlled by PTC. The PTC Patents shall not include
the PTC Background Patents. The PTC Patents existing as of the Effective Date
are listed in Schedule 1.53.

         1.54 "PTC Product" means any finished pharmaceutical or veterinary
product containing a Designated NV Compound designated by PTC (or a Related
Compound) that PTC or its Affiliates Develop and/or Commercialize (either alone
or in collaboration with one or more Third Parties) in the Non-Viral Field in
accordance with the provisions of Article 4A, in all formulations, dosage forms
and package configurations, including, but not limited to, as part of a
Combination Product. For the avoidance of doubt, a PTC Product may not include a
Highly Active Collaboration Compound, a Schering Field NV Compound (unless such
designation has lapsed pursuant to Section 4.1(a)), a Designated NV Compound
designated by Schering (or a Related Compound), unless such designation has
lapsed pursuant to Section 4A.1(c), or any Schering Compound.

         1.55 "PTC Technology Platform" means (i) PTC Know-How, and (ii) any PTC
Compounds.


                                       10
<PAGE>
                                                               EXECUTION VERSION


         1.56 "Regulatory Approval" means any approvals, licenses, registrations
or authorizations of any federal, state, multinational, supranational or local
regulatory agency, department, bureau or other governmental entity necessary or
reasonably useful for the importation, commercial manufacture, use, sale or
other Commercialization of a pharmaceutical product in a regulatory
jurisdiction, including but not limited to pricing and/or reimbursement
approvals.

         1.57 "Regulatory Authority" means any governmental regulatory authority
involved in granting Regulatory Approvals with respect to any Licensed Product
in the Territory, including, without limitation, the FDA and the European
Commission.

         1.58 "Related Compound" means, with respect to a particular NV
Compound, any Collaboration Compound that (i) has the same core structure as
such NV Compound, and (ii) has an activity level against the same target that
was utilized to designate the applicable NV Compound that is at least [**]
percent ([**]%) of the activity level of such NV Compound when measured in the
same assay that was utilized to designate such NV Compound as a Designated NV
Compound (i.e., if the Designated NV Compound has [**] [**] against the same
target). For purposes of this definition, "core structure" means the exact atom
arrangement that makes up the original core structure present in the structure
of the applicable NV Compound, minus any substituent R groups. Notwithstanding
the foregoing, Related Compounds shall not encompass any compound whose activity
against the given target is a result of general toxic properties or other
nonspecific inhibitory properties, e.g. denaturing of a protein. Furthermore,
Related Compounds shall not encompass any Highly Active Compounds, any Schering
Compounds, any Schering Field NV Compounds or any Collaboration Compounds that
are either NV Compounds previously designated by either Party pursuant to
Section 4A.1, or Related Compounds to such other NV Compounds previously
designated by either Party pursuant to Section 4A.1 (unless such designation has
lapsed pursuant to Section 4A.1(c)).

         1.59 "Research" means all activities relating to the identification and
early pre-clinical testing of compounds, including synthesis and testing by in
vitro assay of compounds, the further testing, including structural studies
thereof and/or via animal model, leading up to, but not including, GLP
toxicology testing. Research shall exclude Development.

         1.60 "Research Plan" means the specific plan for conducting the
Research Program, as described in Section 2.1 and attached hereto as Schedule
1.60, as such plan may be revised from time to time by the JSC in accordance
with the provisions of Article 3.

         1.61 "Research Program" means the collaborative research program
undertaken by the Parties pursuant to Article 2 of this Agreement to discover,
identify, synthesize and evaluate PTC Compounds and other Collaboration
Compounds for use in the Viral Field.

         1.62 "Research Technology" means all tangible and intangible know-how,
trade secrets, inventions (whether or not patentable), discoveries,
developments, data, information, and physical, chemical or biological material,
and any replication of or any part of any of the foregoing, that was made by
employees or agents of PTC, Schering, and/or any of their respective Affiliates,
either alone or jointly, during the course of and in the conduct of the Research
Program during the Research Term.


                                       11
<PAGE>
                                                               EXECUTION VERSION


         1.63 "Research Term" means the period during which the Parties shall
conduct the Research Program pursuant to the provisions of Article 2. The
Research Term shall include the Initial Research Term and the Extended Research
Term. The Research Term will automatically terminate upon termination of the
Research Program pursuant to Sections 2.12 or Article 11, or upon termination of
this Agreement for any reason.

         1.64 "Schering Background Know-How" means Know-How within the Control
of Schering, either as of the Effective Date or thereafter during the Research
Term, which is proprietary to Schering or its Affiliates and either (i) relates
to the HCV IRES, to compounds that are Viral IRES Inhibitors, methods of
preparing or using Viral IRES Inhibitors, or methods of treating, diagnosing or
preventing any disease or condition using Viral IRES Inhibitors, or (ii) is
necessary or useful for the Research to be performed under the Research Plan.
Notwithstanding anything herein to the contrary, Schering Background Know-How
shall not include Schering Background Patents. Information within the Schering
Background Know-How shall cease to be proprietary at such time as it becomes
publicly available, or otherwise becomes known to Third Parties without an
obligation of confidentiality, in each case other than through a breach by PTC,
its Affiliates or Sublicensees of the obligations under Article 7. Furthermore,
information within the Schering Background Know-How shall not be deemed
proprietary to Schering if it is (x) known to PTC prior to disclosure under this
Agreement, as shown by written evidence, or (y) independently developed by PTC
or its Affiliates without the use of or reliance on any proprietary, non-public
information within the Schering Background Know-How, as shown by contemporaneous
written evidence.

         1.65 "Schering Background Patents" means Patents within the Control of
Schering, either as of the Effective Date or thereafter during the Research
Term, which (i) contain claims that would be infringed by the Research to be
performed under the Research Plan, including but not limited to chemical
optimization or initial biological characterization of Collaboration Compounds,
or (ii) relate to methods or materials used for discovering, identifying, or
assaying for Viral IRES Inhibitors. The Schering Background Patents existing as
of the Effective Date are listed in Schedule 1.65.

         1.66 "Schering Background Technology" means Schering Background
Know-How and Schering Background Patents.

         1.67 "Schering Compounds" means Active Compounds that are either (x)
identified as Viral IRES Inhibitors by Schering prior to the Effective Date, or
(y) first synthesized or identified by Schering or its Affiliates during the
Term through the use of PTC Know-How that is proprietary to PTC at the time of
first use for synthesis or identification of such Active Compounds by Schering
or its Affiliates or through the use of Joint Know-How, together, in the case of
both (x) and (y), with any metabolites and prodrugs, and any solvates (including
without limitation hydrates), esters, salts, stereoisomers, racemates, tautomers
and polymorphs of any such synthesized compounds that are themselves Active
Compounds or are converted to an Active Compound in vivo. Attached hereto as
Schedule 1.67 is a list of all Schering Compounds believed by Schering to exist
as of the Effective Date; provided, however, it is understood that any compound
that meets the criteria set forth in this Section 1.67 shall be deemed to be a


                                       12
<PAGE>
                                                               EXECUTION VERSION


Schering Compound regardless of whether such compound is identified on Schedule
1.67.

         1.68 "Schering Field NV Compounds" means any NV Compound that Schering
elects to Develop as a Schering Viral Product in accordance with the provisions
of Section 4.1, together with any Related Compounds.

         1.69 "Schering Intellectual Property" means Schering Patents and
Schering Technology.

         1.70 "Schering Know-How" means Know-How within the Control of Schering
that is developed by Schering or its Affiliates during the Term in the conduct
of the Research, Development or Manufacture of Collaboration Compounds or
Licensed Products, which is proprietary to Schering or its Affiliates.
Notwithstanding anything herein to the contrary, Schering Know-How shall exclude
Schering Patents but shall include Joint Know-How to the extent Controlled by
Schering. Information within the Schering Know-How shall cease to be proprietary
at such time as it becomes publicly available, or otherwise becomes known to
Third Parties without an obligation of confidentiality, in each case other than
through a breach by PTC, its Affiliates or Sublicensees of the obligations under
Article 7. Furthermore, information within the Schering Know-How shall not be
deemed proprietary to Schering if it is (x) known to PTC prior to disclosure
under this Agreement, as shown by written evidence, or (y) is independently
developed by PTC or its Affiliates without the use of or reliance on any
proprietary, non-public information within the Schering Know-How, as shown by
contemporaneous written evidence.

         1.71 "Schering Licenses" means the licenses and other rights granted or
to be granted to Schering pursuant to Sections 5.1(a), 5.1(b), 5.2, 5.3(a) and
5.4(a).

         1.72 "Schering Non-Viral Product" means any finished pharmaceutical or
veterinary product containing a Designated NV Compound designated by Schering
(or a Related Compound) that Schering or its Affiliates Develop and/or
Commercialize (either alone, or in collaboration with one or more Third Parties)
in the Non-Viral Field in accordance with the provisions of Article 4A, or a
Related Compound, in all formulations, dosage forms and packaging
configurations, including, but not limited to, as part of a Combination Product.
For the avoidance of doubt, a Schering Non-Viral Product may not include any
Designated NV Compound designated by PTC (or a Related Compound), unless such
designation has lapsed pursuant to Section 4A.1(c). Notwithstanding the
foregoing, a product Developed by Schering that contains either (x) both an NV
Compound and a Highly Active Collaboration Compound, or (y) an NV Compound that
Schering elects to Develop as a Schering Viral Product in accordance with the
provisions of Section 4.1, shall not be deemed a Schering Non-Viral Product and
shall instead be deemed a Schering Viral Product.

         1.73 "Schering NV Know-How" means, with respect to a Designated NV
Compound designated by PTC, any Schering Know-How which (x) relates to such
Designated NV Compound (or a Related Compound), methods of preparing or using
such Designated NV Compound (or a Related Compound) in the Non-Viral Field or
methods of treating, diagnosing or preventing any disease or condition in the
Non-Viral Field using such Designated NV Compound (or a Related Compound), and
(y) is developed prior to the date that PTC designated such NV Compound as a
Designated NV Compound.


                                       13
<PAGE>
                                                               EXECUTION VERSION


         1.74 "Schering NV Patents" means, with respect to a Designated NV
Compound designated by PTC, any Patents Controlled by Schering during the Term
which (x) claim inventions that are Invented prior to the date that PTC
designates such NV Compound as a Designated NV Compound, and (y) claim or cover
(i) the composition of matter of such Designated NV Compound (or a Related
Compound), (ii) the use of such Designated NV Compound (or a Related Compound)
in the Non-Viral Field, (iii) a method of treating, diagnosing or preventing any
disease or condition in the Non-Viral Field using such Designated NV Compound
(or a Related Compound) or (iv) a method of Manufacturing such Designated NV
Compound (or a Related Compound).

         1.75 "Schering Patents" means those Patents Controlled by Schering
during the Term which (i) claim Program Inventions, or other inventions Invented
by Schering or its Affiliates during the Term in the conduct of Research,
Development or Manufacture of Highly Active Collaboration Compounds (or, in the
case of the license to be granted under Section 5.3(b), NV Compounds), Schering
Field NV Compounds or Schering Viral Products, and (ii) contain claims that
would be infringed by the Research, Development, Manufacture, use, import or
sale of Highly Active Collaboration Compounds (or, in the case of the license to
be granted under Section 5.3(b), NV Compounds), Schering Field NV Compounds or
Schering Viral Products in the Field. The Schering Patents shall include the
Joint Patents to the extent Controlled by Schering, but except as explicitly
provided in this Section 1.75 do not include the Schering NV Patents.

         1.76 "Schering Technology" means (i) Schering Know-How, and (ii) any
Schering Compounds.

         1.77 "Schering Viral Product" means any finished pharmaceutical or
veterinary product containing either a Highly Active Collaboration Compound or
Schering Field NV Compound, in each case in all formulations, dosage forms and
packaging configurations, including, but not limited to, as part of a
Combination Product. For the avoidance of doubt, a Schering Viral Product may
not include any Designated NV Compound designated by PTC pursuant to Section
4A.1 (or any Related Compound), unless such designation has lapsed pursuant to
Section 4A.1(c).

         1.78 "Specified Third Party Patents" means any Patents owned or
controlled by a Third Party (and not Controlled by a Party or its Affiliates)
which claim the composition of matter of a Highly Active Collaboration Compound
or Schering Field NV Compound, the use of a Highly Active Collaboration Compound
or Schering Field NV Compound in the Field, a method of treating, diagnosing or
preventing any disease or condition through the use of a Highly Active
Collaboration Compound or Schering Field NV Compound, or a method of
manufacturing a Highly Active Collaboration Compound or Schering Field NV
Compound.

         1.79 "Sublicensee" means a Third Party to whom a Party has granted a
license or sublicense to make, have made, import, use, sell, or offer for sale
Licensed Products pursuant to Section 5.5(b), 5.5(c) or 5.5(d). Third Parties
that are permitted to distribute and resell Licensed Product purchased from
Schering, its Affiliates or any entity designated by Schering or its Affiliates,
or from PTC or its Affiliates, or any entity designated by PTC or its
Affiliates, shall be


                                       14
<PAGE>
                                                               EXECUTION VERSION


considered Sublicensees only if such Third Parties are also responsible for
marketing and promoting the applicable Licensed Product in the applicable
country. In addition, Third Parties that Manufacture Licensed Product on behalf
of a Party for supply to a Party or its Affiliates or Sublicensees (and have no
other rights to Develop or Commercialize such Licensed Product) are not
Sublicensees.

         1.80 "Territory" means all countries of the world.

         1.81 "Third Party" means any entity other than PTC or Schering or any
of their respective Affiliates.

         1.82 "Third Party License Agreement" means any contract or agreement
pursuant to which a Party or its Affiliates obtains or has obtained rights to or
under any Third Party Patents or Third Party Know-How to Research, Develop,
Manufacture or Commercialize Collaboration Compounds or Licensed Products in the
Field. The Third Party License Agreements existing as of the Effective Date are
set forth in Schedule 1.82

         1.83 "Valid Claim" means a claim of any issued, unexpired Patent which
has not been revoked, withdrawn, canceled, disclaimed or held unenforceable or
invalid by a decision of a court or tribunal of competent jurisdiction from
which no appeal can be taken, or with respect to which an appeal is not taken
within the time allowed for appeal, and which has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise.

         1.84 "Viral Field" means the prevention, treatment or diagnosis of all
viral diseases or conditions in humans or animals.

         1.85 "Viral IRES Inhibitor" means a compound which has as its primary
mechanism of action the inhibition (either directly or indirectly) of viral
replication by virtue of decreasing IRES-dependent translation of viral
proteins. For clarity, a compound which broadly inhibits viral replication as a
result of general toxic properties or other nonspecific inhibitory properties
shall not be considered a Viral IRES Inhibitor.

         ADDITIONAL DEFINITIONS. Each of the following definitions is set forth
in the section of this Agreement indicated below:

DEFINITION                                                SECTION
----------                                                -------
AEs                                                       4.10(d)
Agreement                                                 Preamble
Blocking Patent                                           11.5(b)
Collaboration Patents                                     9.3(e)
Designated NV Compound                                    4A.1(a)
Designation Date                                          4A.1(a)
Development Milestones Group                              6.2
Development Plan                                          4.3
Dollars or "$"                                            6.15

                                       15
<PAGE>
                                                               EXECUTION VERSION


Effective Date                                            Preamble
Existing Third Party License Agreement                    6.7(f)
Extended Research Plan                                    2.8(b)
Extended Research Term                                    2.8(a)
FD&C Act                                                  1.28
GAAP                                                      1.40
HCV                                                       Recitals
HCV IRES                                                  Recitals
Indemnitor                                                10.3
Invention Policy                                          9.1
IRES Research Program                                     2.10(a)
Joint Inventions                                          9.1(c)
JPT                                                       9.3(e)
JSC                                                       3.1
key internal Schering project team meetings               3.8
Liability                                                 10.1
LIBOR                                                     6.12
Materials                                                 2.9
Monotherapy Licensed Product                              1.40
Party; Parties                                            Preamble
Project Leaders                                           3.7
PTC                                                       Preamble
PTC Licensed Compound Patents                             9.3(b)
PTC Indemnitee                                            10.2
PTC Triggering Event                                      11.6(a)
Publishing Party                                          7.7
Reviewing Party                                           7.7
Schering                                                  Preamble
Schering Indemnitee                                       10.1
Schering Triggering Event                                 4.12
Second Schering Viral Product                             6.3
Term                                                      11.1
Terminated Compound                                       11.7(b)(ii)
Termination Date                                          11.7(b)(iii)
Third Party Activity                                      2.10(e)
Unqualified Blocking Opinion                              11.5(b)
Unqualified Opinion                                       6.7(a)
USPTO                                                     8.4(i)


                                       16
<PAGE>
                                                               EXECUTION VERSION


                                    ARTICLE 2

                                RESEARCH PROGRAM

         2.1 Collaborative Research. Commencing on the Effective Date, and
subject to the terms and conditions herein, the Parties shall each use
Commercially Reasonable Efforts to conduct the Research Program on a
collaborative basis pursuant to the Research Plan. The Research Plan, among
other things, shall specify the scientific direction of the program, the
specific research objectives to be achieved during the Research Program, the
specific responsibilities of each of the Parties under the Research Plan, and
the specific number of FTEs to be provided by PTC (and funded by Schering
pursuant to Section 2.5(a)) to support the Research Plan. The Parties agree that
the goal of the Research Program is to identify one or more Highly Active
Collaboration Compounds that are suitable for designation as potential
Development Candidates, as well as to identify one or more Highly Active
Collaboration Compounds that are suitable for designation as potential Back-Up
Development Candidates. The Research Plan may be amended by the JSC from time to
time in accordance with the provisions of Article 3.

         2.2 Conduct of the Research; Allocation of Responsibilities.

              (a) The Research Program will be managed and directed by the JSC,
as provided in Article 3 hereof.

              (b) Subject to the oversight of the JSC, PTC shall, with the
advice and assistance of Schering, be primarily responsible for the chemical
optimization activities and biological/pharmacological characterization
activities as defined in the Research Plan, and Schering shall, with the advice
and assistance of PTC, be responsible for all other aspects of the Research Plan
that are necessary to determine whether or not a Highly Active Collaboration
Compound is suitable for designation as a potential Development Candidate or a
Back-Up Development Candidate.

              (c) During the Research Term, (i) PTC shall disclose to Schering
such of the PTC Know-How as Schering reasonably needs to perform its obligations
and assigned tasks under the Research Plan, and (ii) Schering shall disclose to
PTC such of the Schering Background Know-How as PTC reasonably needs to perform
its obligations and assigned tasks under the Research Plan. Notwithstanding the
foregoing, nothing in this Agreement shall require PTC to disclose to Schering
its Know-How or Patents relating to its GEMS screening technology (other than
the published or issued Patents listed on Schedule 1.47A).

              (d) All work conducted by either Party in the course of the
Research Program shall be completely and accurately recorded, in sufficient
detail and in good scientific manner, in separate laboratory notebooks distinct
from other work being conducted by such Party. On reasonable notice, and at
reasonable intervals, each Party shall have the right to inspect and copy all
such records of the other Party or its Affiliates reflecting Research Technology
or work done under the Research Program.


                                       17
<PAGE>
                                                               EXECUTION VERSION


              (e) The Parties acknowledge and agree that neither Party
guarantees the success of the Research Program tasks undertaken hereunder.

         2.3 PTC Research Efforts. During the Research Term, PTC agrees to
commit to the Research Program such number of FTEs in its or its Affiliates'
employ as shall be specified in the Research Plan. In conducting the Research
Program, PTC shall be responsible for the tasks allocated to it under the
Research Plan. In the performance of such work, PTC shall maintain and utilize
scientific and research/development staff, laboratories, offices and other
facilities consistent with such undertaking. PTC shall use personnel with
sufficient skills and experience as are required to accomplish efficiently and
expeditiously the objectives of the Research Program as set forth in the
Research Plan in good scientific manner and in compliance in all material
respects with all applicable Laws.

         2.4 Schering Research Efforts. During the Research Term, Schering shall
commit to the Research Program sufficient FTEs in its or its Affiliates' employ
to conduct Schering's obligations under the Research Plan, and shall report to
the JSC the approximate number of Schering FTEs that are engaged in the Research
Program. In conducting the Research Program, Schering shall be responsible for
the tasks allocated to it under the Research Plan. In the performance of such
work, Schering shall maintain and utilize scientific and research/development
staff, laboratories, offices and other facilities consistent with such
undertaking. Schering shall use personnel with sufficient skills and experience
as are required to accomplish efficiently and expeditiously the objectives of
the Research Program as set forth in the Research Plan in good scientific manner
and in compliance in all material respects with all requirements of applicable
Laws.

         2.5 Research Funding; Responsibility for Costs of the Research Program.

              (a) During the Initial Research Term, Schering agrees to provide
PTC with funding (at the FTE Rate) for the number of FTEs set forth in the
Research Plan, as it may be amended from time to time. The JSC shall have the
discretion to adjust the number of FTEs to be provided by PTC and supported by
Schering during the Initial Research Term consistent with changes in the
Research Plan; provided that in the initial phase of the Research Plan (prior to
Schering's acceptance of the first Development Candidate), the JSC shall not (i)
increase the number of FTEs funded by Schering on an annualized basis to greater
than [**], or (ii) decrease the number of FTEs funded by Schering on an
annualized basis to fewer than [**]. Following Schering's acceptance of the
first Development Candidate, the number of FTEs to be funded by Schering will be
decreased by the JSC to reflect the decreased activities, if any, required under
the Research Plan to identify a Back-up Development Candidate and support the
accepted Development Candidate. It is currently expected that the number of FTEs
to be funded by Schering during the second phase of the Research Plan (following
Schering's acceptance of the first Development Candidate) will be approximately
[**] of the number that is funded by Schering during the initial phase of the
Research Plan; provided, however, that in no case will the number of FTEs funded
by Schering during this second phase of the Research Plan exceed [**] or be
fewer than [**] on an annualized basis. Following designation of a Back-Up
Development Candidate by Schering, the number of FTEs to be funded by Schering
will be


                                       18
<PAGE>
                                                               EXECUTION VERSION


decreased by the JSC to reflect the decreased activities required under the
Research Plan to support the accepted Back-up Development Candidate and accepted
Development Candidate. Funding of any PTC FTEs by Schering during the Extended
Research Term shall be as provided in Section 2.8.

              (b) The amounts due to PTC under this Section 2.5 shall be payable
in equal installments on a quarterly basis, on the fifteenth (15th) day of each
January, April, July and October of each year during the Research Term.

              (c) Except for the FTE funding to be provided by Schering pursuant
to Sections 2.5(a) and 2.8, each Party shall be solely responsible for all costs
and expenses incurred by it in performing activities assigned to it under the
Research Plan. Notwithstanding the foregoing, to the extent that PTC agrees to
undertake any activities that are not related to the chemical optimization or
biological or pharmacological characterization of Collaboration Compounds,
Schering shall be responsible for any PTC internal costs (such costs to be
calculated by multiplying the number of PTC FTEs by the FTE Rate), as well as
any external costs incurred by PTC in performing such activities (but only to
the extent such external costs have been approved by Schering in advance).

         2.6 Disclosure of Facilitating Research Technology. Each Party will
disclose to the other all Research Technology discovered, Invented, or otherwise
made by such Party that is necessary to enable the other Party to perform its
obligations under the Research Plan or to exercise its rights under this
Agreement, including, without limitation, information regarding Collaboration
Compounds, activities of Collaboration Compounds, and results of in vitro and in
vivo studies, assay techniques and new assays. Such Research Technology will be
promptly disclosed to the other Party, with meaningful discoveries or advances
being communicated as promptly as practicable after such information is obtained
or its significance is appreciated.

         2.7 Information Regarding Collaboration Compounds. PTC shall inform
Schering and the JSC in writing on a quarterly basis and otherwise reasonably
promptly in response to Schering's written request of its discovery, synthesis,
or biological characterization of Collaboration Compounds during the Research
Term. In addition, the Project Leaders shall implement procedures for the prompt
sharing between them of information and materials generated under the Research
Plan relating to the discovery, synthesis, or biological characterization of
Collaboration Compounds. Without limiting PTC's obligations pursuant to Sections
2.6, 2.14 or 3.9, PTC will provide Schering with such information regarding such
Collaboration Compounds as Schering shall reasonably request in writing,
including without limitation the structures of Collaboration Compounds and the
results of PTC's testing of such compounds, and will provide Schering with
samples of such Collaboration Compounds in amounts to be agreed upon by the
Parties but which are sufficient to enable Schering to complete its
responsibilities to characterize such Collaboration Compounds according to the
Research Plan. Without limiting Schering's obligations pursuant to Sections 2.6,
2.14 or 3.9, results of studies performed by Schering on such Collaboration
Compounds will be communicated to PTC and the JSC on a quarterly basis during
the Research Term.


                                       19
<PAGE>
                                                               EXECUTION VERSION


         2.8 Extension of Research Term.

              (a) By written notice to PTC given at least [**] prior to the
expiration of the Initial Research Term, Schering may extend the Research Term
for an additional year. In the event that Schering has elected to extend the
Research Term for an additional year, then, by written notice to PTC given at
least [**] prior to the then scheduled expiration of the Research Term, Schering
may extend the Research Term for a further additional year, subject to PTC's
written consent within [**] of receipt of Schering's notice, such consent not to
be unreasonably withheld or delayed. Any period during which the Research Term
has been extended beyond the Initial Research Term pursuant to this Section 2.8
is referred to herein as the "Extended Research Term".

              (b) During the Extended Research Term, the JSC shall propose a
revised Research Plan (the "Extended Research Plan"), which shall specify the
number of FTEs to be contributed by PTC and funded by Schering and the specific
Research activities to be performed by PTC during such period; provided,
however, that (i) PTC shall not be required to perform a level of chemical
optimization or biological or pharmacological characterization activities that
cannot reasonably be accomplished by the number of FTEs to be funded by
Schering, and (ii) PTC shall not be required to perform activities that are not
related to chemical optimization or biological/pharmacological characterization
of Collaboration Compounds without PTC's consent.

         2.9 Material Transfer. In order to facilitate the Research Program,
either Party may provide to the other Party certain biological materials or
chemical compounds including, but not limited to Collaboration Compounds,
receptors, reagents and screens (collectively, "Materials") owned by or licensed
to the supplying Party (other than under this Agreement) for use by the other
Party in furtherance of the Research Program. Except as otherwise provided under
this Agreement, all such Materials delivered to the other Party shall, subject
to the licenses granted the other Party pursuant to Article 5, remain the sole
property of the supplying Party, shall be used only in furtherance of the
Research Program and solely under the control of the other Party and its
Affiliates, shall not be used or delivered to or for the benefit of any Third
Party without the prior written consent of the supplying Party, and shall not be
used in research or testing involving human subjects. The Materials supplied
under this Section 2.9 must be used with prudence and appropriate caution in any
experimental work, since not all of their characteristics may be known. Each
Party represents and warrants to the other that it has the right to provide the
Materials to the other Party for the uses contemplated herein. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 2.9 OR IN SECTION 8.4, THE MATERIALS ARE
PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF
FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS
WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD
PARTY.


                                       20
<PAGE>
                                                               EXECUTION VERSION


         2.10 Exclusivity.

              (a) During the Exclusivity Term, each Party agrees not to, and
agrees to cause its Affiliates not to, (i) conduct any activity, either on its
own, or for the benefit of, sponsored by, or pursuant to any type of corporate
partnership, licensing arrangement or joint venture with, any Third Party, that
has as its goal or intent discovering, identifying or otherwise Researching
Viral IRES Inhibitors except pursuant to this Agreement (an "IRES Research
Program"), (ii) Develop, either on its own, or for the benefit of, sponsored by,
or pursuant to any type of corporate partnership, licensing arrangement or joint
venture with, any Third Party, any compound resulting from an IRES Research
Program, except pursuant to this Agreement, or (iii) grant any license, either
express or implied, or any option to license, to any Third Party to utilize any
intellectual property Controlled by such Party or its Affiliates for the purpose
of discovering, identifying or otherwise Researching Viral IRES Inhibitors
except pursuant to this Agreement. Each Party acknowledges that the other Party
is in the business of developing products in the Viral Field and that, except as
explicitly provided to the contrary in this Agreement, but subject to the
licenses granted to Schering pursuant to Section 5.2, each Party has and will
have programs related to the Research and Development of products for the
treatment of viral diseases or conditions. For the avoidance of doubt, nothing
in this Section 2.10 shall preclude either Party from (x) entering into
collaborations with academic or government entities in support of the Research
Program that are consistent with the other provisions of this Agreement
(including without limitation the licenses granted to Schering pursuant to
Sections 5.1(a) and 5.1(b)), or (y) Developing or Commercializing outside of the
scope of this Agreement any compound or product that is not a Collaboration
Compound (subject to the restriction set forth in subsection (ii) above).
Without limiting the generality of the foregoing, it is expressly understood
that Schering and its Affiliates shall have the right to conduct Development
during the Exclusivity Term with respect to compounds or products that are Viral
IRES Inhibitors that are acquired or in-licensed following the Effective Date if
such compounds or products have initiated human clinical trials as of the time
they were in-licensed or acquired by Schering or its Affiliates.

              (b) In the event of a breach of the provisions of Section 2.10(a)
by a Party or its Affiliates, the non-breaching Party may, as one of its
remedies and not to the exclusion of any other remedy such Party may have, (i)
terminate this Agreement pursuant to Section 11.3, and/or (ii) terminate the
provisions of Section 2.10(a) as it applies to such non-breaching Party.

              (c) In the event this Agreement is terminated pursuant to Section
11.4 or 11.5(a), or Schering terminates this Agreement pursuant to Section 11.2
or 11.5(b), the restrictions set forth in this Section 2.10 shall automatically
terminate. Furthermore, in the event that a Party terminates this Agreement
pursuant to Section 11.3, the restrictions set forth in this Section 2.10 shall
automatically terminate with respect to such Party (but shall remain in effect
with respect to the breaching Party).

              (d) The Parties agree that, given the high costs and significant
risks involved in discovering and developing pharmaceutical products, and given
that the Parties will be exchanging Confidential Information in order to perform
the Research Program, the exclusive relationship between them which is reflected
in this Section 2.10 is a fair and efficient means to reach a satisfactory
conclusion from their cooperative efforts.


                                       21
<PAGE>
                                                               EXECUTION VERSION


              (e) The provisions of Section 2.10(a) are not intended to apply to
any activity otherwise prohibited by Section 2.10(a) if a Party's involvement in
such activity results from such Party's acquisition by or of a Third Party (by
merger or otherwise), but only if (i) such Third Party, prior to such
acquisition or merger, was already engaged in such prohibited activity (the
"Third Party Activity"), (ii) such Third Party Activity remains separate from
the activities contemplated by this Agreement, and no Patent rights or Know-How
of the other Party are used in connection with such Third Party Activities, and
(iii) in the case of an acquisition of a Third Party by a Party, such Party does
not significantly expand the scope of, or financial commitment to, such Third
Party Activity.

         2.11 Subcontractors. PTC may not perform any of its obligations under
the Research Program through a subcontractor without first obtaining Schering's
prior written consent, such consent not to be unreasonably withheld or delayed.
The subcontractors identified on Schedule 2.11 as currently used, or planned to
be used, by PTC are hereby deemed to be approved for the purposes of this
Section 2.11. It is understood that as part of the approval process, any
subcontractors must undertake in writing obligations of confidentiality and
non-use regarding Schering's and PTC's Confidential Information which are
substantially the same as those undertaken by PTC pursuant to Article 7 hereof
(either directly with Schering, or through their agreements with PTC). In the
event PTC is authorized to perform one or more of its obligations under the
Research Program through a subcontractor, then PTC shall at all times be
responsible for the performance of such subcontractor.

         2.12 Termination of Research Program.

              (a) In the event that Schering has not accepted a Development
Candidate within two years of the Effective Date, Schering shall have the right
to terminate the Research Program upon [**] prior written notice to PTC.

              (b) At any time following designation of a Back-Up Development
Candidate by Schering, Schering shall have the right to terminate the Research
Program upon [**] prior written notice to PTC.

              (c) At the end of the Research Term, whether extended or not
pursuant to the provisions of Section 2.8, all obligations of the Parties to
conduct any further activities under the Research Plan shall terminate, but the
other rights and obligations under this Agreement shall not otherwise be
affected, except to the extent otherwise provided herein.

         2.13 Testing of Active Compounds Identified by PTC Outside of the
Research Program. In the event that any compound synthesized by or on behalf of
PTC or its Affiliates prior to the end of the Research Term and outside of any
activities conducted under the Research Program is identified by PTC or its
Affiliates prior to the end of the Research Term as an Active Compound, PTC
shall promptly undertake appropriate steps to determine whether such Active
Compound is a Viral IRES Inhibitor. Any such compound that is identified as a
Viral IRES Inhibitor shall be deemed a PTC Compound pursuant to the provisions
of Section 1.48(iii).


                                       22
<PAGE>
                                                               EXECUTION VERSION


         2.14 Allocation of Certain Collaboration Compounds. Reasonably promptly
following the Effective Date, the Parties shall establish appropriate provisions
for transferring to Schering (i) an amount of PTC's existing inventory of each
of the NV Compounds to be determined as follows: the [**] the [**], and any
remaining PTC inventory [**] and (ii) in addition to any shipments of Highly
Active Collaboration Compounds required elsewhere in this Agreement, all of
PTC's remaining inventory of Highly Active Collaboration Compounds within [**]
after the end of the Research Term. With respect to any quantities of NV
Compounds that are synthesized following the Effective Date and prior to the end
of the Research Term, the Parties shall share the inventory of each such
compound equally.

                                    ARTICLE 3

                            JOINT STEERING COMMITTEE

         3.1 Creation and Structure of the JSC. The Parties shall create a joint
steering committee (the "JSC") to facilitate the Parties' collaboration called
for herein. The JSC shall consist of three representatives designated by each
Party, or such other number as the Parties may mutually agree. As soon as
practicable following the Effective Date (but in no event more than thirty (30)
days following the Effective Date), each Party shall designate their initial
representatives on the JSC. Schering shall designate one of its representatives
as the Chairperson of the JSC. Each Party shall be free to change its
representatives on notice to the other or to send a substitute representative to
any JSC meeting; provided, however, that each Party will ensure that at all
times during the existence of the JSC, their representatives on the JSC are
appropriate in terms of expertise and seniority (including at least one member
of senior management) for the then current stage of Research and Development of
Collaboration Compounds or Schering Viral Products. The JSC shall continue to
function until such date as Schering has received the first Regulatory Approval
for a Schering Viral Product in each of the United States, in three Major
Markets in the European Union, and in Japan; provided, however, that once
Schering receives the first Regulatory Approval for a Schering Viral Product in
the United States, in three Major Markets in the European Union, or in Japan,
then the JSC's activities shall cease to exist with respect to the United
States, the European Union or Japan, respectively.

         3.2 Meetings. During the Research Term, the JSC shall meet on a
quarterly basis, or at such other frequency as the Parties shall agree.
Following the Research Term, the JSC shall meet semi-annually, or at such other
frequency as the Parties shall agree. During the Research Term, meetings of the
JSC shall alternate between the offices of PTC and Schering. Following the end
of the Research Term, meetings of the JSC shall occur at the offices of
Schering, or at such other location as Schering and PTC shall agree. A JSC
member of the Party hosting the meeting shall serve as Secretary of that
meeting, who shall be responsible for preparing the minutes of the meeting. Such
minutes shall provide a description in reasonable detail of the discussions held
at the meeting and a list of any actions, decisions or determinations approved
by the JSC. The Parties agree that they shall endeavor to ensure that draft
minutes of each meeting shall be distributed within fifteen (15) days of the
meeting, and final minutes shall be approved by both Parties within forty-five
(45) days of the meeting. Final minutes of each meeting shall be distributed to
the members of the JSC by the Chairperson. The JSC may also convene, or be
polled or consulted, from time to time by means of telecommunications, video
conferencing or


                                       23
<PAGE>
                                                                  EXECUTION COPY


written correspondence, as deemed necessary or appropriate. Each Party shall
disclose to the other proposed agenda items in advance of each meeting of the
JSC. The JSC may invite other representatives of the Parties with special skills
or knowledge to attend meetings where appropriate. The JSC shall adopt such
other rules as shall be necessary or convenient for its work. Each Party shall
be responsible for all travel and other costs for its representatives to attend
meetings of, and otherwise participate on, the JSC.

         3.3 Responsibilities of the JSC. The JSC shall be the primary vehicle
for interaction between the Parties with respect to the Research Program and the
Development of Schering Viral Products, and shall function as a forum for the
Parties to inform and consult with one another concerning progress of the
Research Program and make decisions regarding the Research Program, as well as
for Schering to inform and consult with PTC concerning the Development of
Schering Viral Products. Without limiting the foregoing, the JSC shall be
responsible for:

              (i) directing, managing and monitoring the progress of the
Research Program;

              (ii) making any modifications to the Research Plan as the JSC
deems appropriate;

              (iii) developing and approving a charter for a joint project team,
which shall include participation of appropriate representatives from both
Parties and shall be responsible for drafting recommendations with respect to
the Research Plan;

              (iv) identifying to the Parties that the criteria set forth in
Schedule 1.14 as guidelines for Development Candidates have been reasonably met
with respect to a particular Collaboration Compound, and making recommendations
to Schering that one or more Collaboration Compounds be designated by Schering
as a Development Candidate;

              (v) reviewing and approving any changes to Schedule 1.14, and
developing and approving criteria for the Back-Up Development Candidate
referenced in Section 1.3;

              (vi) making recommendations to Schering that one or more
Collaboration Compounds be designated by Schering as a Back-Up Development
Candidate;

              (vii) reviewing and approving Schering's initial Development Plans
for the first Development Candidate or first Back-Up Development Candidate, as
well as reviewing and commenting upon (but not approving) any changes to such
Development Plans which Schering determines are necessary or appropriate (for
clarity, if the Development of a Development Candidate or Back-Up Development
Candidate is terminated for any reason prior to the first Regulatory Approval of
such Development Candidate or Back-Up Development Candidate, and Schering
subsequently continues to Develop one or more other Schering Viral Products,
then the next most advanced Development Candidate (and, if any exist, the next
most advanced Back-Up Development Candidate) shall be deemed "first" for the
purposes of this Section 3.3(vii));

              (viii) reviewing the progress under such Development Plans;


                                       24
<PAGE>
                                                               EXECUTION VERSION


              (ix) reviewing and commenting upon the patent filing and
prosecution strategies of the Parties as provided in Article 9, including
directing, managing and monitoring the activities of the Joint Patent Team
pursuant to Section 9.3(e); and

              (x) reviewing and coordinating each Party's internal approval of
any publications by the Parties to the extent required pursuant to Section 7.7.

         3.4 Subcommittees of the JSC. From time to time, the JSC may establish
one or more subcommittees to oversee particular projects or activities related
to the Research Program, and such subcommittees will be constituted as the JSC
agrees.

         3.5 Decisions of the JSC. At least two JSC representatives from each
Party must participate in a meeting of the JSC in order for there to be a quorum
for such meeting. Subject to the remainder of this Section 3.5, all decisions of
the JSC shall be made by the unanimous vote of the Parties, with the JSC
representatives of each Party collectively having one vote. The Parties shall
use reasonable good faith efforts to reach consensus on all issues within the
responsibility of the JSC. In the event that the members of the JSC cannot agree
with respect to a particular issue within the responsibility of the JSC, then:

              (a) if the issue relates to the Research Program, or activities to
be conducted under the Research Plan, or the approval of either of the initial
Development Plans within the scope of Section 3.3(vii), such issue shall be
referred to the Vice-President, Discovery of the Schering-Plough Research
Institute division of Schering Corporation and the Senior Vice President, Drug
Discovery Technologies of PTC, who shall meet in a good faith effort to resolve
the dispute within [**]. In the event such individuals cannot agree on a
resolution of the dispute within such [**] period, such issue shall be referred
to the CEO of PTC and the Senior Vice-President, Research & Development of
Schering-Plough Corporation, who shall meet in a good faith effort to resolve
the dispute within [**]. In the event such individuals cannot agree on a
resolution of the dispute within such [**] period, Schering's decision shall
control; provided, however, in no event [**] [**] pursuant to this Section
3.5(a) in order to modify the Research Plan in a manner that would (i) be
inconsistent with the provisions of Section 2.5(a), (ii) require PTC to perform
a level of chemical optimization or biological/pharmacological characterization
activities that cannot reasonably be accomplished by the number of FTEs to be
funded by Schering, (iii) require PTC to perform activities that are not related
to chemical optimization or biological/pharmacological characterization of
Collaboration Compounds without PTC's consent, or (iv) prevent PTC from
presenting for designation a Development Candidate or Back-Up Development
Candidate.

              (b) if the issue relates to the Development of a Schering Viral
Product (other than the approval of the initial Development Plans within the
scope of Section 3.3(vii)), or any activities conducted under a Development
Plan, or relates to any other matter within the responsibility of the JSC, then
Schering's decision shall control.

         3.6 Limitation on JSC Authority. Notwithstanding the creation of the
JSC, each Party shall retain the rights, powers and discretions granted to it
hereunder, and the JSC shall not be delegated or vested with any such rights,
powers or discretion unless such delegation or vesting


                                       25
<PAGE>
                                                               EXECUTION VERSION


is expressly provided for herein or the Parties expressly so agree in writing.
The JSC shall not have the power to make any decisions other than those set
forth in Section 3.3 or otherwise expressly set forth in this Agreement. Without
limiting the generality of the foregoing, the JSC may not amend or modify this
Agreement, which may be amended or modified only as provided in Section 13.10.
Furthermore, it is understood that the JSC shall not have any responsibilities
related to the Research or Development of Schering Non-Viral Products or PTC
Products.

         3.7 Project Leaders. Schering and PTC shall each appoint one or more
persons to coordinate their respective activities under the Research Program
(the "Project Leaders"). Such individuals shall be responsible for, among other
things, ensuring the appropriate level of information exchange between the
Parties regarding Collaboration Compounds and Schering Viral Products, as
contemplated by Section 3.9, as well as scheduling the JSC meetings.

         3.8 Project Team Access. Until Schering pays the milestone payment set
forth in Section 6.2(e), (i) [**] and as are reasonably acceptable [**], shall
have the right [**], and (ii) Schering shall provide [**]. For purposes of this
Section 3.8, [**] relating to such products.

         3.9 Reports to JSC. During the Exclusivity Term, each Party shall
provide the JSC on a quarterly basis with reports regarding the activities
performed by such Party under the Research Plan. Each report shall summarize in
reasonable detail the major activities undertaken by such Party during the prior
quarter, as well as the results of such activities. Such reports will be
accurate and, where appropriate, will contain raw data from studies carried out
by or on behalf of such Party. Following the Exclusivity Term, with respect to
any Schering Viral Products within the scope of Section 3.3(vii), Schering shall
also provide semi-annual progress reports to the JSC regarding the Development
of such products under the applicable Development Plans.

                                    ARTICLE 4

             DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS

         4.1 Responsibility for Development; Diligence.

              (a) Selection of Development Candidates and Back-Up Development
Candidates. Based upon the criteria set forth in Schedule 1.14 and the criteria
it develops under Section 1.3, the JSC shall review all data relating to the
Collaboration Compounds and shall identify appropriate Collaboration Compounds
for recommendation to Schering for selection as Development Candidates and
Back-Up Development Candidates. It is understood and agreed that, subject to the
provisions of Section 4.1(d), all decisions regarding the designation of
Development Candidates and Back-Up Development Candidates shall be made by
Schering in its sole discretion; provided, however, Schering agrees to make such
decisions in good faith based upon its then-current internal decision-making
standards and processes. Upon the designation of any Collaboration Compound by
Schering as a Development Candidate or Back-Up Development Candidate, Schering
shall promptly notify PTC in writing. In addition, for the avoidance of doubt,
the first Highly Active Collaboration Compound


                                       26
<PAGE>
                                                               EXECUTION VERSION


(or NV Compound designated as a Schering Field NV Compound pursuant to this
Section 4.1(a)) for which Schering commences GLP toxicology studies intended to
support submission of an IND shall be deemed to be a Development Candidate, and
the second Highly Active Collaboration Compound (or NV Compound designated as a
Schering Field NV Compound pursuant to this Section 4.1(a)) for which Schering
commences GLP toxicology studies intended to support submission of an IND shall
be deemed to be a Back-Up Development Candidate. In addition to selecting Highly
Active Collaboration Compounds for Development as Schering Viral Products, it is
understood that Schering shall also have the right at any time to designate one
or more NV Compounds for Development as Schering Viral Products in the Viral
Field; provided that Schering shall not make any such designation unless it (1)
has a good faith intention to Develop and Commercialize such NV Compound in the
Viral Field, and (2) has provided PTC with data supporting its designation,
together with a written research plan describing Schering's planned initial
Research regarding such compound, which research plan is consistent with a
commitment by Schering to initiate [**] (or a later downstream Research or
Development activity) with respect to such compound (or a Related Compound)
within [**] of the date of such designation by Schering. For clarity, Schering
may not designate a particular NV Compound for Development as a Schering Viral
Product if either (x) PTC has previously designated such compound as a
Designated NV Compound pursuant to Section 4A.1, or (y) such NV Compound is a
Related Compound for another NV Compound previously designated by PTC as a
Designated NV Compound pursuant to Section 4A.1. If, with respect to any NV
Compound designated by Schering for Development as a Schering Viral Product,
Schering fails to initiate [**] (or later downstream activities) with respect to
such compound, or any Related Compound, within the [**] period described above
in this Section 4.1(a), then Schering's exclusive license to such NV Compound
(and any Related Compounds) shall terminate, PTC shall have the right to
designate such compound as a PTC Designated NV Compound in accordance with the
provisions of Section 4A.1, and Schering shall have no right to re-designate
such NV Compound as a compound for Development as a Schering Viral Product or
Schering Non-Viral Product for a period of [**] following the end of the [**]
period described above in this Section 4.1(a).

              (b) Responsibility for Development. Following the Effective Date,
[**] Development of Schering Viral Products in the Field, and shall [**] make
decisions relating thereto, subject in each case to Schering's obligations under
Section 4.1(d) and the provisions of Article 3. Without limiting the generality
of the foregoing, [**] shall be responsible for (a) determining which Highly
Active Collaboration Compounds and Schering Field NV Compounds will be Developed
as Schering Viral Products in the Field, (b) determining the Development
strategy for all Schering Viral Products, (c) preparing the Development Plans
and, to the extent set forth in Section 3.3, reviewing the same with the JSC,
(d) developing protocols for all pre-clinical and clinical studies to be
conducted for Schering Viral Products, and (e) conducting any pre-clinical and
clinical studies regarding Highly Active Collaboration Compounds and Schering
Viral Products.

              (c) PTC's Participation in Early Development Activities. Schering
may request that PTC perform certain Development activities related to
pre-clinical or Phase I clinical studies for any Schering Viral Product
following the Effective Date. PTC may agree to perform such services, subject to
the provisions of Section 4.2, but is not obligated to do so.

              (d) Diligence. Schering and its Affiliates shall use Commercially
Reasonable Efforts to Develop at least one Schering Viral Product in each of the
Major Markets. It is understood that Schering shall have no obligation to
Develop any particular Schering Viral Product, and Schering's failure to Develop
any particular Schering Viral Product shall in no way


                                       27
<PAGE>
                                                                  EXECUTION COPY


be considered a breach of Schering's obligations under this Section 4.1(d) or
provide any basis for PTC to seek termination of this Agreement.

              (e) Development Benchmarks. In the event that Schering has not (i)
[**] following its acceptance of the first Development Candidate, or (ii) has
not [**] of acceptance of the applicable Development Candidate, then PTC shall
have the right to request that the Parties meet to discuss in good faith any
concerns that PTC may have regarding Schering's satisfaction of its diligence
obligations set forth in Section 4.1(d). During such discussions, Schering shall
provide a reasonable explanation as to why it believes either of the foregoing
specified events has not occurred by the applicable date.

                           (i) If (A) after good faith discussions PTC still
         reasonably believes that Schering's failure to achieve either of the
         events specified in Section 4.1(e) by the dates specified therein
         demonstrates that Schering has breached its diligence obligation
         pursuant to Section 4.1(d), or (B) such good faith discussions have not
         been initiated within [**] of PTC's request therefor or completed
         within [**] (or in either case such longer time period as the Parties
         may mutually agree), then PTC shall have the right to initiate dispute
         resolution proceedings pursuant to Article 12. In such proceedings,
         [**].

                           (ii) For the avoidance of doubt, nothing in Section
         4.1(d) is intended to limit the ability of PTC to bring claims in good
         faith against Schering at any time regarding Schering's alleged
         breaches of Section 4.1(d); provided, however, it is understood that
         [**] shall apply solely with respect to the specific issue described in
         such section and only with respect to those proceedings (including
         litigation) related to such specific issue and not to any other
         allegations of PTC regarding lack of diligence (whether such
         allegations are raised in a dispute resolution proceeding initiated
         pursuant to Section 4.1(e)(i) or otherwise).

                           (iii) The Parties acknowledge that there are numerous
         reasons that are beyond the control of Schering that might impact
         Schering's ability to achieve either of the events specified in Section
         4.1(e) by the dates specified therein (e.g., safety concerns which
         arise during testing of the Development Candidate), and it is
         understood that the failure by Schering to achieve either of such
         events by such dates shall not, in and of itself, be deemed a breach of
         Schering's diligence obligations under Section 4.1(d) or create any
         inference that Schering has breached its obligations under Section
         4.1(d).

              (f) Development Deadlines. In the event that [**] following
acceptance of the first Development Candidate, then PTC shall have the right to
terminate this Agreement upon written notice to Schering. Any termination by PTC
pursuant to this Section 4.1(f) shall have the same effect as if Schering
terminated this Agreement pursuant to Section 11.2.

         4.2 Responsibility for Development Costs. Schering shall be responsible
for all costs and expenses related to its Development of Schering Viral
Products.

         4.3 Development Plans. For each Schering Viral Product for which
Schering elects to initiate human clinical trials, Schering shall prepare a
development plan outlining the major


                                       28
<PAGE>
                                                               EXECUTION VERSION


Development activities that Schering expects to undertake, including anticipated
timescales, relating to the product up to the submission of the initial NDA for
the applicable product, which plan shall reflect a level of diligence consistent
with Schering's obligations under Section 4.1(d) (each, a "Development Plan").
It is understood that each Development Plan is intended to be a fluid document
and is subject to change by Schering based on, among other things, changes in
the market, discussions with investigators and Regulatory Authorities and the
results of studies undertaken; provided that in no event shall any changes made
by Schering to a Development Plan reflect a level of diligence that is less than
that required by Section 4.1(d). Subject to the provisions of Article 7, during
the Term, Schering shall provide PTC with access to copies of [**]. The
Development Plans will be created, approved, and amended according to Schering's
then-current internal standards and processes for such plans.

         4.4 Ownership of Development Data and Other Know-How.

              (a) PTC shall own (i) all data, results and other Know-How
generated or developed by it prior to the Effective Date and (ii) all data,
results and other Know-How generated or developed in the performance of any
activities conducted by PTC or any of its Affiliates under the Research Plan,
subject in the case of both (i) and (ii) to the Schering Licenses. All such
data, results and other Know-How shall be considered PTC Confidential
Information.

              (b) Schering shall own (i) all data, results and other Know-How
generated or developed by it prior to the Effective Date and (ii) all data,
results and other Know-How generated or developed in the performance of any
activities conducted by Schering or any of its Affiliates under the Research
Plan, subject, in the case of both (i) and (ii) to the licenses granted or to be
granted to PTC pursuant to Sections 5.1(c), 5.3(b), 5.4(b) and 11.7. All such
data, results and other Know-How shall be considered Schering Confidential
Information.

              (c) Schering shall own Development Data and other Know-How
generated or developed in the performance of Development, Commercialization or
Manufacturing activities performed by or on behalf of it relating to Highly
Active Collaboration Compounds, Schering Field NV Compounds, or Schering Viral
Products, including without limitation all data accumulated from all clinical
trials conducted under any Development Plan, subject to the licenses to be
granted to PTC pursuant to Section 11.7.

              (d) Schering shall own Development Data and other Know-How
generated or developed in the performance of Research, Development,
Commercialization or Manufacturing activities performed by or on behalf of it
relating to NV Compounds or Schering Non-Viral Products, including without
limitation all data accumulated from all clinical trials conducted by it with
respect to such products, subject to the licenses granted to PTC pursuant to
Sections 5.3(b) and 5.4(b).

              (e) PTC shall own Development Data and other Know-How generated or
developed in the performance of Research, Development, Commercialization or
Manufacturing activities performed by or on behalf of it relating to NV
Compounds or PTC Products, including


                                       29
<PAGE>
                                                               EXECUTION VERSION


without limitation all data accumulated from all clinical trials conducted by it
with respect to such products, subject to the licenses granted to Schering
pursuant to Sections 5.3(a) and 5.4(a).

         4.5 Access [**]. Subject to PTC's obligations under Article 7, during
the Term and promptly upon their availability, Schering shall provide PTC with
[**] Schering Viral Products.

         4.6 [**]. During the term of the JSC, PTC shall have the right to [**].
For purposes of clarity, it is understood that the foregoing provisions are
intended to apply to [**], and not to [**].

         4.7 Responsibility for Commercialization. Schering shall have full
responsibility for the Commercialization of Schering Viral Products in the
Field. Schering agrees to use Commercially Reasonable Efforts to Commercialize
at least one Schering Viral Product in the Field in each of the Major Markets.

         4.8 Meetings to Discuss Schering's [**]. Following the date that
Schering [**], representatives from the Parties' respective marketing
organizations shall meet to discuss Schering's [**]. Thereafter, until [**] any
Schering Viral Product [**], the Parties' representatives shall continue to meet
for the purpose of (i) [**] with [**], and (ii) discussions with respect thereto
between Schering and PTC. For clarity, the Parties' obligations pursuant to this
Section 4.8 shall terminate at such time [**].

         4.9 Manufacturing and Supply Responsibilities. Schering shall be
responsible for Manufacturing or having Manufactured all quantities of Highly
Active Collaboration Compound, Schering Field NV Compound and Schering Viral
Product necessary for its Development and Commercialization throughout the
Territory, as well as all activities related to process development and scale-up
of the manufacturing process, all at its sole costs and expense. Following the
Effective Date and during the Research Term, PTC shall provide Schering on a
quarterly basis, or reasonably promptly in response to Schering's written
request, with any Know-How or other information related to synthesis methods for
Highly Active Collaboration Compounds or Schering Field NV Compounds developed
by or on behalf of PTC and Controlled by PTC, either prior to or during the
Research Term.

         4.10 Regulatory Matters Related to Schering Viral Products. Schering,
its Affiliates and Sublicensees shall be responsible for all regulatory matters
related to Schering Viral Products, and shall be responsible for all costs and
expenses incurred in performing its regulatory responsibilities. All INDs
regarding Schering Viral Product in the Territory, and all NDAs, shall be filed
in the name of and owned by Schering, its Affiliates and Sublicensees, and
Schering, its Affiliates and Sublicensees shall hold all Regulatory Approvals
for Schering Viral Product throughout the Territory.


                                       30
<PAGE>
                                                               EXECUTION VERSION


              (a) Regulatory Submissions. Schering, its Affiliates and
Sublicensees shall oversee, monitor and coordinate all regulatory actions,
communications and filings with, and submissions to, the FDA and other
Regulatory Authorities in the Territory with respect to all Schering Viral
Products.

              (b) Regulatory Meetings and Correspondence. Schering, its
Affiliates and Sublicensees shall be responsible for interfacing, corresponding
and meeting with the FDA and other Regulatory Authorities throughout the
Territory with respect to Schering Viral Products. Until the completion of any
pre-IND meetings with FDA and EMEA for the initial Development Candidate, PTC
shall have the right to have [**], or another senior, experienced employee of
PTC reasonably acceptable to Schering, participate as an observer in such
pre-IND meetings, as well as participate in internal Schering meetings or
discussions occurring immediately before or after, and related to, such pre-IND
meetings, and shall be provided with advance access to Schering materials
prepared for such meetings. PTC shall also have the right to review and comment
upon any correspondence with FDA or EMEA related to such meetings. With respect
to any meetings with FDA or EMEA beyond the pre-IND meetings (e.g., end of Phase
I meetings, end of Phase II meetings), PTC shall have the right to request that
one of its representatives be permitted to participate as an observer in such
meetings, and Schering shall consider such requests in good faith.

              (c) Additional Information Regarding Regulatory Activities in the
Territory. Schering shall provide PTC [**], and respond within a reasonable time
frame to all reasonable inquiries by PTC with respect thereto. Schering shall
also provide PTC in a timely manner [**] concerning the same.

              (d) Pharmacovigilance. Schering shall be responsible for the
collection, review, assessment, tracking and filing of information related to
adverse events ("AEs") associated with Schering Viral Products, in accordance
with US 21 C.F.R. 312.32, 314.80 and comparable regulations, guidance,
directives and the like governing AEs associated with Schering Viral Products
that are applicable outside of the United States.

         4.11 Regulatory Matters Related to Other Licensed Products. Schering
shall be responsible for all regulatory matters related to Schering Non-Viral
Products, and shall be responsible for all costs and expenses incurred in
performing its regulatory responsibilities. PTC shall be responsible for all
regulatory matters related to PTC Products, and shall be responsible for all
costs and expenses incurred in performing its regulatory responsibilities.

         4.12 Impact of Change of Control of Schering. In the event that a Third
Party, either alone or together with its Affiliates, acquires, directly or
indirectly, fifty percent (50%) or more of the voting stock of Schering or
Schering-Plough Corporation, or all or substantially all of the assets of
Schering or its Affiliates related to the Schering antiviral business, whether
through merger, consolidation, acquisition or otherwise (a "Schering Triggering
Event"), then such Third Party (or the applicable Affiliate of such Third Party)
shall, within [**] of such Schering Triggering Event, confirm in writing to PTC
its intentions to continue to meet its obligations under this Agreement, and
offer to meet with PTC to discuss any initial plans it may have to revise the
applicable Development Plans in effect immediately prior to the effective date
of the Schering Triggering Event (it being understood that nothing in this
Section 4.12 is intended to


                                       31
<PAGE>
                                                               EXECUTION VERSION


limit in any way Schering's right to make subsequent changes to the Development
Plans in accordance with the provisions of Section 4.1(b)).

         4.13 Additional Reports and Information to be Provided Following
Termination of the JSC. Following the termination of the JSC pursuant to Section
3.1, Schering shall (x) provide PTC with annual written reports summarizing the
progress of its Development of any Schering Viral Products during the prior
year, and (y) at the request of PTC, meet on a semi-annual basis for informal
discussions regarding its Development activities with respect to Schering Viral
Products.

         4.14 Certain Expenses of PTC. PTC shall be solely responsible for any
expenses incurred by it in connection with any activities undertaken by it
pursuant to Sections 4.6, 4.8, 4.12 and 4.13.


                                   ARTICLE 4A

  DEVELOPMENT AND COMMERCIALIZATION OF DESIGNATED NV COMPOUNDS BY EITHER PARTY

         4A.1 Designation of Designated NV Compounds.

              (a) At any time following the Research Term, either Party shall
have the right to designate one or more NV Compounds as candidates for
Development and Commercialization in the Non-Viral Field according to the
provisions set forth in this Section 4A.1. In order to designate an NV Compound
as a Designated NV Compound (as defined below) for Development and
Commercialization in the Non-Viral Field, the designating Party must provide a
written notice to the other Party which identifies the specific structure of the
NV Compound, and either (x) provides data which demonstrates that the NV
Compound has [**] against a given target in the Non-Viral Field, and includes a
commitment [**] (or later downstream Research or Development activity) with
respect to the NV Compound (or a Related Compound) within [**] of the
Designation Date (as defined below) for such NV Compound, or (y) in cases where
[**] provides a description of the assay or methods used to measure activity in
the Non-Viral Field and a description of the activity observed, and includes a
commitment [**] with respect to the NV Compound (or a Related Compound) within
[**] of the Designation Date for such NV Compound. As used in this Agreement,
"Designation Date" means the date on which a written notice is received by the
non-designating Party complying with the foregoing requirements. For purposes of
designating an NV Compound, activity against a given target must be measured
using either (x) a published assay that is generally accepted in the scientific
community as a valid measure of activity against such target, or (y) an assay
that is proprietary to the designating Party and that would be considered by one
of ordinary skill in the art as a valid measure of activity against the given
target. Each Party agrees that it shall not designate an NV Compound under this
Section 4A.1(a) unless it has a good faith intention to Develop and
Commercialize the NV Compound (or a Related Compound) for at least one
indication in the Non-Viral Field. An NV Compound designated pursuant to and in
compliance with the provisions of this Section 4A.1(a) shall be referred to as a
"Designated NV Compound."


                                       32
<PAGE>
                                                               EXECUTION VERSION


              (b) If a Party validly designates an NV Compound as a Designated
NV Compound pursuant to the provisions of Section 4A.1(a), then it shall receive
those licenses with respect to such Designated NV Compound and any Related
Compounds specified in Section 5.4.

              (c) If a Party fails [**], as applicable under Section 4A.1(a)
above (or later downstream Development or Commercialization activity) with
respect to a Designated NV Compound (or Related Compound) designated by it
within [**] of the Designation Date for such Designated NV Compound, then the
following provisions shall be applicable:

                           (i) The designating Party's designation of such NV
         Compound as a Designated NV Compound shall be null and void, and the
         license granted to it pursuant to Section 5.4 with respect to such
         Designated NV Compound and Related Compounds shall automatically
         terminate;

                           (ii) The designating Party shall thereafter be
         precluded from designating such Designated NV Compound and Related
         Compounds as a Designated NV Compound for a period of [**] from the end
         of the applicable [**] period under Section 4A.1(a); and

                           (iii) The other Party shall have the right to
         designate such NV Compound and Related Compounds as a Designated NV
         Compound, subject to the satisfaction of the conditions of Section
         4A.1(a) and without use of any Confidential Information of the other
         Party with respect to such NV Compound, provided, however, that it is
         understood that the mere fact that an NV Compound has been designated
         without reference to any data provided by the other Party in connection
         with such designation shall not constitute Confidential Information of
         the other Party solely for the purposes of this Subsection
         4A.1(c)(iii).

              (d) The Parties further agree that, in the event a Party
designates an NV Compound pursuant to this Section 4A.1, the non-designating
Party shall not be required to remove such Designated NV Compound (or compound
known by it to be a Related Compound) from its screening library, so long as the
non-designating Party does not utilize any data it has generated, or may in the
future generate, with respect to the screening of such Designated NV Compound
(or compound known by it to be a Related Compound) unless such designation has
lapsed pursuant to Section 4A.1(c).

              (e) For clarity, (x) PTC may not designate any Schering Compound,
any Schering Field NV Compound or any Designated NV Compound (or any Related
Compound thereof) previously designated by Schering (unless such designation has
lapsed pursuant to Section 4A.1(c)), and (y) Schering may not designate as a
Designated NV Compound any Designated NV Compound (or any Related Compound
thereof) previously designated by PTC (unless such designation has lapsed
pursuant to Section 4A.1(c)).

         4A.2 Development of NV Compounds by Schering. Following the expiration
or termination of the Research Term, Schering and its Affiliates shall not
conduct any clinical development work, or license any Third Party to conduct any
clinical development work, on any


                                       33
<PAGE>
                                                               EXECUTION VERSION


NV Compound until either (x) such NV Compound has been designated by Schering as
a Designated NV Compound as provided in Section 4A.1, or (y) such NV Compound
has been designated by Schering for Development for use in the Viral Field in
accordance with the provisions of Section 4.1(a).

         4A.3 Development of NV Compounds by PTC. PTC and its Affiliates shall
not conduct any clinical development work, or license any Third Party to conduct
any clinical development work, on any NV Compound until such NV Compound has
been designated by PTC as a Designated NV Compound as provided in Section 4A.1.

         4A.4 No Development or Commercialization of Collaboration Compounds in
the Viral Field by PTC. PTC agrees that during the Term neither it nor any of
its Affiliates shall (A) conduct, cause any Third Party to conduct, or authorize
any licensee of PTC (excluding Schering) to conduct, a human clinical trial or
an animal study within the Viral Field with respect to any Collaboration
Compound or PTC Product, or knowingly provide financial support to, or furnish a
Collaboration Compound or PTC Product to, any Third Party for any such purpose,
(B) publish or authorize any licensee to publish any data from any human
clinical trial or animal study which would promote a Collaboration Compound or
PTC Product for use in the Viral Field, or (C) market or promote, or authorize a
Third Party to market or promote, a Collaboration Compound or PTC Product for
use in the Viral Field through advertising, promotion or the like. PTC shall
impose the restrictions set forth in this Section 4A.4 on all its
licensees/sublicensees and distributors of PTC Products.

         4A.5 No Development or Commercialization of NV Compounds in the Viral
Field by Schering. Schering agrees that, except to the extent Schering has
designated a particular NV Compound for Development in the Viral Field pursuant
to the provisions of Section 4.1(a), during the Term neither it nor any of its
Affiliates shall (A) conduct, cause any Third Party to conduct, or authorize any
licensee of Schering to conduct, a human clinical trial or an animal study
within the Viral Field with respect to any NV Compound or Schering Non-Viral
Product, or knowingly provide financial support to, or furnish a NV Compound or
Schering Non-Viral Product to, any Third Party for any such purpose, (B) publish
or authorize any licensee to publish any data from any human clinical trial or
animal study which would promote a NV Compound or Schering Non-Viral Product for
use in the Viral Field, or (C) market or promote, or authorize a Third Party to
market or promote, a NV Compound or Schering Non-Viral Product for use in the
Viral Field through advertising, promotion or the like. Schering shall impose
the restrictions set forth in this Section 4A.5 on all its
licensees/sublicensees and distributors of Schering Non-Viral Products.

         4A.6 Applicability of Restrictions. Each Party acknowledges that the
restrictions set forth in Sections 4A.2 through 4A.5 that are applicable to it
shall apply regardless of whether any license under the other Party's Patents or
Know-How is required in order to enable it to Develop or Commercialize the
applicable compound or the applicable Licensed Product containing such compound.


                                       34
<PAGE>
                                                               EXECUTION VERSION


                                    ARTICLE 5

                                    LICENSES

         5.1 Research Licenses.

              (a) Subject to the other provisions of this Agreement, PTC hereby
grants to Schering and its Affiliates an exclusive (even as to PTC and its
Affiliates) worldwide, paid-up right and license under the PTC Intellectual
Property to perform Schering's obligations under the Research Plan during the
Research Term and to otherwise conduct Research with respect to Collaboration
Compounds during the Research Term; provided, however, that PTC shall retain the
right to practice the PTC Intellectual Property in order to enable it to perform
its obligations under the Research Plan during the Research Term.

              (b) Subject to the other provisions of this Agreement, PTC hereby
grants to Schering and its Affiliates a non-exclusive worldwide, paid-up right
and license under the PTC Background Patents solely for the purpose of enabling
Schering to perform its obligations under the Research Plan during the Research
Term and to otherwise conduct Research with respect to Collaboration Compounds
during the Research Term.

              (c) Subject to the other provisions of this Agreement, Schering
hereby grants to PTC and its Affiliates a non-exclusive worldwide, paid-up right
and license under the Schering Background Technology solely for the purpose of
enabling PTC to perform its obligations under the Research Plan during the
Research Term.

         5.2 Exclusive Development and Commercialization License to Schering. In
addition to the rights granted to Schering pursuant to Section 5.1(a) and
5.1(b), and subject to the other provisions of this Agreement, PTC hereby grants
to Schering (x) an exclusive (even as to PTC and its Affiliates), worldwide,
royalty-bearing right and license, with the right to grant sublicenses (in
accordance with the provisions of Section 5.5(b) below), under the PTC
Intellectual Property to Develop, make, have made, use, and import Highly Active
Collaboration Compound(s) and Schering Field NV Compounds in the Field and to
Develop, make, have made, use, sell, offer to sell and import Schering Viral
Product(s) in the Field, and (y) a non-exclusive, worldwide, right and license
under the PTC Intellectual Property to use Collaboration Compounds for Research
purposes.

         5.3 Co-Exclusive Research Licenses to Both Parties.

              (a) Effective as of the expiration or termination of the Research
Term, PTC hereby grants to Schering a co-exclusive (together with PTC and its
Affiliates), world-wide right and license, with the right to grant sublicenses
(in accordance with the provisions of Section 5.5(c) below), under the PTC
Intellectual Property to Research, make, have made, use, and import NV
Compound(s) (excluding any Schering Field NV Compounds) in the Non-Viral Field.

              (b) Effective as of the expiration or termination of the Research
Term, Schering hereby grants to PTC a co-exclusive (together with Schering and
its Affiliates), world-


                                       35
<PAGE>
                                                               EXECUTION VERSION


wide right and license, with the right to grant sublicenses (in accordance with
the provisions of Section 5.5(c) below), under the Schering Patents, Schering NV
Know-How, and Schering Know-How existing as of the end of the Research Term to
Research, make, have made, use and import NV Compound(s) (excluding Schering
Compounds and Schering Field NV Compounds) in the Non-Viral Field.

         5.4 Exclusive Licenses to Develop and Commercialize Designated NV
Compounds.

              (a) Effective automatically upon valid designation of a NV
Compound as a Designated NV Compound by Schering pursuant to the provisions of
Section 4A.1, (x) PTC hereby grants to Schering an exclusive, world-wide,
royalty-bearing right and license, with the right to grant sublicenses (in
accordance with the provisions of Section 5.5(d) below), under the PTC NV
Patents and PTC NV Know-How to Research, Develop, make, have made, use, and
import the Designated NV Compound and any Related Compounds in the Non-Viral
Field and to Research, Develop, make, have made, use, sell, offer to sell and
import Schering Non-Viral Product(s) which contain such Designated NV Compound
or any Related Compound in the Non-Viral Field, and (y) the license granted by
Schering to PTC pursuant to the provisions of Section 5.3(b) shall automatically
terminate with respect to (but only with respect to) such Designated NV Compound
and any Related Compounds.

              (b) Effective automatically upon valid designation of a NV
Compound as a Designated NV Compound by PTC pursuant to the provisions of
Section 4A.1, (x) Schering hereby grants to PTC an exclusive, worldwide,
royalty-bearing right and license, with the right to grant sublicenses (in
accordance with the provisions of Section 5.5(d) below), under the Schering NV
Patents and Schering NV Know-How to Research, Develop, make, have made, use, and
import the applicable Designated NV Compound and any Related Compounds in the
Non-Viral Field and to Research Develop, make, have made, use, sell, offer to
sell and import PTC Product containing such Designated NV Compound or any
Related Compounds in the Non-Viral Field, and (y) the license granted by PTC to
Schering pursuant to the provisions of Section 5.3(a) shall automatically
terminate with respect to (but only with respect to) such Designated NV Compound
and any Related Compounds.

         5.5 Right to Sublicense.

              (a) Neither Party shall have the right to grant sublicenses under
the rights granted to it in Section 5.1, except to the extent required for use
of approved subcontractors pursuant to Section 2.11.

              (b) Subject to the terms and conditions of this Agreement,
Schering shall have the right to grant sublicenses under the rights granted to
it in Section 5.2 to its Affiliates. Schering shall also have the right to grant
sublicenses under the rights granted to it in Section 5.2 to Third Parties;
provided, however, that in the case of any sublicense that is granted to a Third
Party with respect to a Major Market in which Schering grants the Sublicensee
the right to Develop any Licensed Product, such sublicense shall be subject to
the prior written consent of PTC, which consent shall not be unreasonably
withheld or delayed. Each such sublicense shall be consistent with all the terms
and conditions of this Agreement, and Schering shall guarantee


                                       36
<PAGE>
                                                               EXECUTION VERSION


the performance of its Affiliates and Sublicensees with respect to any
sublicense granted pursuant to this Section 5.5(b). Upon granting any sublicense
to a Third Party pursuant to this Section 5.5(b), Schering shall promptly inform
PTC and shall provide the relevant details regarding such sublicense (i.e., name
of Sublicensee, product involved and territory involved).

              (c) Either Party shall have the right to grant sublicenses to its
Affiliates under the rights granted to it pursuant to Section 5.3. Neither Party
shall have the right to grant to a Third Party any sublicense under the rights
granted to it pursuant to such Section 5.3 without the prior written consent of
the other Party, such consent not to be unreasonably withheld or delayed. Each
such sublicense shall be consistent with all the terms and conditions of this
Agreement, and the sublicensing Party shall guarantee the performance of its
Affiliates and Sublicensees with respect to any sublicense granted pursuant to
this Section 5.5(c). Upon granting any sublicense to a Third Party pursuant to
this Section 5.5(c), the Party granting such sublicense shall promptly inform
the other Party and shall provide the relevant details regarding such sublicense
(i.e., name of Sublicensee, product involved and territory involved).

              (d) Either Party shall have the right to grant sublicenses under
the rights granted to it under Section 5.4, subject to the restrictions set
forth in Section 4A.4 (in the case of PTC) and Section 4A.5 (in the case of
Schering). Each such sublicense shall be consistent with all the terms and
conditions of this Agreement, and the sublicensing Party shall guarantee the
performance of its Affiliates and Sublicensees with respect to any sublicense
granted pursuant to this Section 5.5(d). Upon granting any sublicense pursuant
to this Section 5.5(d), the sublicensing Party shall (x) promptly inform the
other Party and shall provide the relevant details regarding such sublicense
(i.e., name of Sublicensee, product involved and territory involved), and (y)
provide sufficient evidence to the other Party to demonstrate that it has
complied with the undertakings set forth in Section 4A.4 or 4A.5, as applicable.

              (e) The right to grant sublicenses provided in this Section 5.5
shall survive any termination or expiration of this Agreement, but only to the
extent that the underlying license so survives; provided, however, that the
restriction set forth in Section 5.5(c) with respect to Third Party sublicenses
shall terminate in the event that the other Party's underlying co-exclusive
license terminates.

         5.6 No Further Rights. Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be granted or created by implication, estoppel or
otherwise.

         5.7 Section 365(n) of the Bankruptcy Code. All rights and licenses
granted under or pursuant to any section of this Agreement are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section
101(35A) of the Bankruptcy Code. Each Party shall retain and may fully exercise
all of its rights and elections under the Bankruptcy Code or equivalent
legislation in any other jurisdiction. Upon the bankruptcy of either Party, the
other Party shall further be entitled to a complete duplicate of (or complete
access to, as appropriate) any such intellectual property, and such, if not
already in its possession, shall be promptly delivered to such other Party,
unless the


                                       37
<PAGE>
                                                               EXECUTION VERSION


Party in bankruptcy elects to continue, and continues, to perform all of its
obligations under this Agreement.

         5.8 No Rights to Other Compounds. Each Party acknowledges that the
other Party is in the business of developing products in the Viral Field and
that the other Party has or will have extensive programs related to the Research
and Development of products for the treatment of HCV and other viral diseases or
conditions. Each Party expressly acknowledges and agrees that, except as set
forth in Sections 5.3 and 5.4 (as such sections relate to Related Compounds), it
shall have no rights of any kind under this Agreement to any compounds or
products (or intellectual property related thereto) that are synthesized,
discovered, Developed or Commercialized by the other Party or its Affiliates
during the Term that are not Collaboration Compounds or Licensed Products.

                                    ARTICLE 6

                                  CONSIDERATION

         6.1 Up-front Payment. In partial consideration of the rights granted to
it by PTC under the Schering Licenses, Schering shall pay to PTC an upfront fee
of twelve million Dollars ($12,000,000) within ten (10) Business Days from the
Effective Date. The upfront payment will be unconditional and as such shall not
be subject to any offset, credit, reduction or repayment for any reason
whatsoever.

         6.2 Development Milestone Payments for Schering Viral Products. As
further consideration for the rights granted to it by PTC under the Schering
Licenses, within [**] following the first occurrence of the relevant events
specified below, Schering shall pay to PTC the following amounts:

<TABLE>
<CAPTION>
MILESTONE                                  AMOUNT
---------                                  ------
<S>                     <C>                      <C>
(a)  [**]               [**]                     [**] Dollars ($ [**])
                        [**]                     [**] Dollars ($ [**])
                        [**]                     [**] Dollars ($ [**])

(b)  [**]               [**] Dollars ($ [**])

(c)  [**]               [**] Dollars ($ [**])

(d)  [**]               [**] Dollars ($ [**])

(e) [**]                [**] Dollars ($ [**])
</TABLE>


                                       38
<PAGE>
                                                               EXECUTION VERSION


<TABLE>
<S>                     <C>                      <C>
(f)  [**]               [**] Dollars ($ [**])

(g)  [**]               [**] Dollars ($ [**])

(h)  [**]               [**] Dollars ($ [**])

(i)  [**]               [**] Dollars ($ [**])

(j)   [**]              [**] Dollars ($ [**])

(k)  [**]               [**] Dollars ($ [**])

(l)  [**]               [**] Dollars ($ [**])

(m)  [**]               [**] Dollars ($ [**])

(n)  [**]               [**] Dollars ($ [**])
</TABLE>

It is understood that each of the above milestone payments shall be payable only
once (upon the first achievement of such milestone event by any Schering Viral
Product), regardless of the number of Schering Viral Products that achieve such
milestones. For purposes of clarity, if the Development of a Schering Viral
Product is terminated for any reason prior to the first Regulatory Approval of
such Schering Viral Product, and Schering subsequently continues to Develop one
or more other Schering Viral Products, the above milestones will be paid only
when a Schering Viral Product reaches a milestone beyond the last milestone
achieved by any previous Schering Viral Product. Furthermore, for the milestones
payable under Sections 6.2(a), (c), (e), and (f) (the "Development Milestones
Group"), payment of a milestone within the Development Milestone Group with
respect to a Schering Viral Product shall trigger payment of any earlier unpaid
milestones within the Development Milestone Group for such Schering Viral
Product, and payment of any milestone with respect to such Schering Viral
Product under Sections 6.2(g), (h), and (i) shall trigger payment of all earlier
unpaid milestones within the Development Milestone Group for such Schering Viral
Products. Similar principles shall apply to payment of milestones for an
indication in the Field other than for HCV under Sections 6.2(j)-(n).

For the purposes of Section 6.2(a), a Collaboration Compound will be considered
to have been [**] at such time as PTC has (i) completed all biological
characterization activities for such compound that are required to be performed
by PTC under the Research Plan, (ii) presented the specific chemical structure
of such Collaboration Compound to Schering, and (iii) provided Schering with
sufficient quantities (as determined by the JSC) of such Collaboration Compound
for Schering to commence its evaluation pursuant to the Research Plan.

For purposes of Section 6.2(d), the potential for [**] shall be deemed to have
been demonstrated if either (x) the clinical study results indicate [**], or (y)
Schering or its Affiliates or Sublicensees commence a Pivotal Trial for a
Schering Viral Product that includes a [**] for such product.


                                       39
<PAGE>
                                                               EXECUTION VERSION


For purposes of this Section 6.2, (xx) a clinical trial will be deemed to have
commenced upon administration of the first dose to the first patient enrolled in
the trial, and (yy) in the United States, an NDA shall be deemed to have been
"filed" on the earlier of (i) receipt by Schering of written notice from the FDA
of acceptance for filing of the applicable NDA, or (ii) [**] following the
filing of such NDA submission without the receipt by Schering during such [**]
period of a "Notice of Refusal to File" from the FDA with respect to such NDA.

Milestone payments pursuant to this Section 6.2 will not be subject to any
offset, credit, reduction or repayment for any reason whatsoever.

         6.3 Approval Milestone Payments for a Second Schering Viral Product. As
further consideration for the rights granted to it by PTC under the Schering
Licenses, within [**] following the first occurrence of the relevant events
specified below, Schering shall pay to PTC the following amounts:

<TABLE>
<CAPTION>
MILESTONE                                               AMOUNT
---------                                               ------
<S>                                                     <C>
[**]                                                    [**] Dollars ($ [**])
[**]                                                    [**] Dollars ($ [**])
[**]                                                    [**] Dollars ($ [**])
</TABLE>

For purposes of this Section 6.3, a "Second Schering Viral Product" means a
Schering Viral Product that contains a different Collaboration Compound from the
first Schering Viral Product to achieve Regulatory Approval for the treatment of
HCV in the relevant market. For the avoidance of doubt, it is understood that
the milestone payments set forth in this Section 6.3 shall be payable only once,
regardless of the number of Schering Viral Products that achieve Regulatory
Approval for the treatment of HCV and shall not be payable with respect to
Regulatory Approvals for any indication other than the treatment of HCV.
Furthermore, [**] percent ([**]%) of any milestone payments that are paid by
Schering pursuant to this Section 6.3 shall be fully creditable against any
future royalties that are payable by it pursuant to Section 6.5 with respect to
the Second Schering Viral Product.

Except as explicitly provided in the foregoing paragraph, milestone payments
pursuant to this Section 6.3 will not be subject to any offset, credit,
reduction or repayment for any reason whatsoever.

         6.4 Sales Milestones. As further consideration for the rights granted
to Schering under the Schering Licenses, Schering shall pay PTC each of the
amounts specified below within [**] after the end of the calendar quarter in
which any of the following thresholds are achieved:


                                       40
<PAGE>
                                                               EXECUTION VERSION


<TABLE>
<CAPTION>
SALES THRESHOLDS                                                  AMOUNT
----------------                                                  ------
<S>                                                        <C>
      [**]                                                 [**] Dollars ($ [**])
      [**]                                                 [**] Dollars ($ [**])
</TABLE>

It is understood that each of the above sales milestones shall be payable only
once, regardless of the number of Schering Viral Products that achieve the
applicable sales thresholds. Milestone payments pursuant to this Section 6.4
will not be subject to any offset, credit, reduction or repayment for any reason
whatsoever.

         6.5 Royalties Payable by Schering on Sales of Schering Viral Products.

              (a) Royalty on Net Sales. As further consideration for the rights
granted to Schering under the Schering Licenses, Schering shall pay to PTC, on a
Schering Viral Product-by-Schering Viral Product basis, the following
incremental royalties based on Net Sales of such Schering Viral Product:

<TABLE>
<CAPTION>
                                         Net Sales                                               Rate
                                         ---------                                               ----
<S>                                                                                          <C>
On the first [**] Dollars ($ [**]) in worldwide Net Sales of such Schering Viral Product     [**] percent
in a calendar year                                                                           ([**]%)

On worldwide Net Sales of the Schering Viral Product in excess of [**] Dollars ($ [**])      [**] percent
but less than [**] Dollars ($ [**]) in a calendar year                                       ([**]%)

On worldwide Net Sales of the Schering Viral Product in excess of [**] Dollars ($ [**])      [**] percent
but less than [**] Dollars ($ [**]) in a calendar year                                       ([**]%)

On worldwide Net Sales of the Schering Viral Product in excess of [**] Dollars ($ [**])      [**] percent
but less than [**] Dollars ($ [**]) in a calendar year                                       ([**]%)

On worldwide Net Sales of the Schering Viral Product in excess of [**] Dollars ($ [**]) in   [**] percent
a calendar year                                                                              ([**]%)
</TABLE>

The royalty rates set forth in this Section 6.5(a) are subject to adjustment as
set forth in Sections 6.5(b), 6.5(e) and 6.6, and are subject to any credit
offset to which Schering is entitled pursuant to Section 6.3, 6.7 and 9.7(a),
subject to the overall limits on certain adjustments and credits set forth in
Section 6.8.

              (b) Know-How Royalty. In a country where (x) the sale of a
Schering Viral Product would not infringe a Valid Claim of a PTC Patent or Joint
Patent, Schering shall pay royalties at a rate that is [**]percent ([**]%) of
the applicable royalty rate determined in accordance with Section 6.5(a);
provided, however, the foregoing reduction shall not apply so long as the
Schering Viral Product is entitled to Marketing Exclusivity in such country, and
there


                                       41
<PAGE>
                                                               EXECUTION VERSION


are no other products on the market in such country that contains, as one of its
active ingredients, the same Active Ingredient that is contained in the Schering
Viral Product.

              (c) Duration of Obligation to Pay Royalties.

                           (i) Schering's obligation to pay royalties for any
         Schering Viral Product pursuant to Section 6.5(a) shall remain in
         effect on a country-by-country basis until the later of (A) the
         expiration of the last to expire PTC Patent (including any Joint
         Patent) in such country which contains a Valid Claim which claims such
         Schering Viral Product or its use in the Viral Field or for the
         approved indication, or (B) the expiration of any Marketing Exclusivity
         for such Schering Viral Product in such country (or, if earlier, the
         date of the First Commercial Sale of a Third Party product in such
         country that contains, as one of its active ingredients, the same
         Active Ingredient that is contained in the Schering Viral Product).[**]

                           (ii) Schering's obligation to pay royalties for any
         Schering Viral Product pursuant to Section 6.5(b) shall remain in
         effect until [**] after the First Commercial Sale of any Schering Viral
         Product in such country which contains the same Collaboration Compound
         as that which is contained in the Schering Viral Product.

                           (iii) The obligation to pay royalties pursuant to
         Section 6.5 is imposed only once with respect to the same unit of a
         Schering Viral Product, and there are no circumstances under which
         royalties are payable pursuant to both Sections 6.5(a) and 6.5(b) with
         respect to the sale of the same unit.

              (d) Paid-up License. Upon expiration of the royalty term for a
Schering Viral Product in a country as described in Section 6.5(c)(i) or
6.5(c)(ii), whichever is later, Schering shall thereafter have a fully paid-up,
non-exclusive license to PTC Know-How to make, have made, use, sell, offer for
sale, and import such Schering Viral Product in that country in the Field.

              (e) Adjustment to Royalty Rates. With respect to each country in
the Territory, on a country-by-country basis, the royalty payable pursuant to
Section 6.5(a) (but not Section 6.5(b)) with respect to any Schering Viral
Product shall be reduced by [**] percent ([**]%) the first time that Third Party
total unit sales of any products having the same Collaboration Compound as that
which is contained in such Schering Viral Product in such country exceed [**]
percent ([**]%) of the total unit sales of such Schering Viral Product by
Schering, its Affiliates and Sublicensees in that country during two consecutive
calendar quarters (calculated on an equivalent per kilogram of Collaboration
Compound basis). Thereafter, such royalties would be further reduced by an
additional [**] percent ([**]%) for each additional [**] percent ([**]%)
increase in the unit sales of such products by Third Parties in such country
compared to the unit sales of Schering, its Affiliates and Sublicensees, so that
upon such Third Party products reaching [**]% of total unit sales such royalty
will reach (and be subject to) the [**]% limit set forth in Section 6.8.
Notwithstanding the foregoing, this Section 6.5(e) shall not apply with respect
to any country in which royalties on Net Sales of a Schering Viral Product are
determined under Section 6.6.


                                       42
<PAGE>
                                                               EXECUTION VERSION


         6.6 Compulsory License. Schering and PTC shall use reasonable efforts
to prevent any Third Party from obtaining or being granted a Compulsory License,
and to the extent that a Third Party obtains or is granted such a Compulsory
License, Schering and PTC will use reasonable efforts to limit or reduce the
scope or applicability of such Compulsory License. If, notwithstanding
Schering's and PTC's use of reasonable efforts, any Third Party obtains a
Compulsory License, then PTC or Schering (whoever has first notice) shall
promptly notify the other Party. If the royalty rate payable by the grantee of
the Compulsory License is less than the effective royalty rates payable to PTC
pursuant to Section 6.5 with respect to the applicable country (as such rates
are adjusted by the other provisions of this Agreement), then the royalty rate
payable by Schering with respect to such country shall automatically be reduced
to [**]. For the avoidance of doubt, for purposes of determining the royalties
due PTC under Section 6.5 with respect to sales of a product by any compulsory
licensee, Schering's Net Sales from such sales shall be calculated based solely
on the actual royalty payments, if any, paid by the compulsory licensee to
Schering under the Compulsory License.

         6.7 Responsibility for Third Party Royalties.

              (a) In the event that, following the Effective Date, Schering
believes that it is necessary or appropriate to obtain a license to one or more
Specified Third Party Patents, it shall notify PTC and the Parties shall meet to
discuss in good faith the basis for Schering's conclusion. In the event that the
Parties are unable to agree on whether to enter into a Third Party License
Agreement related to a Specified Third Party Patent, the Parties shall confer
[**]. If, following such consultation, the Parties are still unable to agree
upon whether to enter into such Third Party License Agreement, Schering shall
[**] provided, that, if, within [**] of Schering notifying PTC in writing of
such decision, PTC notifies Schering in writing [**], then Schering shall not
enter into such Third Party License Agreement until the earlier of (i) [**] from
the date of PTC's notice, or (b) the date PTC informs Schering [**]. If [**]
within such [**] period, and Schering enters into such Third Party License
Agreement, then any royalties, fees or other payments owing under such Third
Party License Agreement that are in consideration for a Patent [**] and which
claims the composition of matter of the relevant Highly Active Collaboration
Compound or Schering Field NV Compound shall be credited at the rate set forth
in Subsection 6.7(b)(y) of this Agreement rather than the rate that is set forth
in Subsection 6.7(b)(x) of this Agreement; provided, however, that [**] pursuant
to this Section 6.7(a), if as a result of any judgment in favor of, or
settlement with, a Third Party pursuant to Section 9.7(a), Schering is required
to pay to such Third Party royalties or other consideration related to such
Third Party's Patents which claim the composition of matter of a Highly Active
Collaboration Compound or Schering Field NV Compound, Schering shall be entitled
to treat such payments pursuant to Section 6.7(b)(x). For the purposes of this
Agreement, [**] pursuant to this Agreement with respect to a Highly Active
Collaboration Compound (or, for the purposes of this Section 6.7(a) only, a
Schering Field NV Compound) [**]. Schering, with the participation of PTC, shall
be responsible for negotiating any Third Party License Agreements related to any
Specified Third Party Patent. The Parties shall endeavor to agree upon all of
the key financial and other terms of such Third Party License Agreements; [**].


                                       43
<PAGE>
                                                               EXECUTION VERSION


              (b) In the event that Schering, or its Affiliates or Sublicensees
enters into any Third Party License Agreement following the Effective Date
related to any Specified Third Party Patents, Schering shall be entitled to
credit against any royalties that are due PTC pursuant to Section 6.5 (x) [**]
percent ([**]%) of the amount of any royalties, fees or other payments due under
such Third Party License Agreement to the extent such payments are in
consideration for a Patent that claims the composition of matter of a Highly
Active Collaboration Compound or Schering Field NV Compound (except as provided
above in Section 6.7(a)), and (y) [**] percent ([**]%) of the amount of any
royalties, fees or other payments due under such Third Party License Agreement
to the extent such payments are in consideration for a Patent that claims (i)
the use of a Highly Active Collaboration Compound or Schering Field NV Compound
in the Viral Field, (ii) a method of treating, diagnosing or preventing any
disease or condition in the Viral Field through the use of a Highly Active
Collaboration Compound or Schering Field NV Compound, or (iii) a method of
manufacturing a Highly Active Collaboration Compound or Schering Field NV
Compound, in all cases subject to the limits set forth in Section 6.8.

              (c) With the exception of any Third Party License Agreements
within the scope of Section 6.7(a), Schering shall be solely responsible for
negotiating and entering into any other Third Party License Agreements related
to any Schering Viral Product, and shall be solely responsible for any fees,
royalties or other payments due to Third Parties under such agreement.

              (d) Schering shall be solely responsible for negotiating any Third
Party License Agreements that relate to a Schering Non-Viral Product, and shall
be solely responsible for any fees, royalties or other payments due to Third
Parties under such agreement.

              (e) PTC shall be solely responsible for negotiating any Third
Party License Agreements that relate to a PTC Product, and shall be solely
responsible for any fees, royalties or other payments due to Third Parties under
such agreement.

              (f) Each Party shall be solely responsible for any fees, royalties
or other payments due to Third Parties under Third Party License Agreements to
which it or its Affiliates are a Party as of the Effective Date (each, an
"Existing Third Party License Agreement").

         6.8 Limit on Adjustments. Notwithstanding anything in this Agreement to
the contrary, in no event shall the aggregate of all adjustments and credits
applicable under Sections 6.5(e) or 6.7(b) with respect to any Schering Viral
Product for any calendar quarter cause the royalties payable by Schering under
Section 6.5(a) and (b) in such calendar quarter to be reduced by more than [**]
percent ([**]%) of the amounts that would otherwise be due under such Sections
(after taking into consideration any credits to which Schering shall be entitled
pursuant to Section 6.3) for such Schering Viral Product in such calendar
quarter; provided, however, that any unused credits or adjustments shall be
carried over to future calendar quarters throughout the Term.

         6.9 Royalties Payable by Schering on Sales of Schering Non-Viral
Products.

              (a) Royalty on Net Sales. As further consideration for the rights
granted to Schering pursuant to Section 5.4(a), Schering shall pay to PTC, on a
Schering Non-Viral


                                       44
<PAGE>
                                                               EXECUTION VERSION


Product-by-Schering Non-Viral Product basis, a royalty in the amount of [**]
percent ([**]%) of Net Sales of such Schering Non-Viral Product.

              (b) Schering's obligation to pay royalties for any Schering
Non-Viral Product pursuant to Section 6.9(a) shall remain in effect on a
country-by-country basis until the later of (i) the expiration of the last to
expire PTC NV Patent or Joint Patent in such country which contains a Valid
Claim which claims such Schering Non-Viral Product or its use in the Non-Viral
Field, (ii) the expiration of any Marketing Exclusivity for such Schering
Non-Viral Product in such country (or, if earlier, the date of the First
Commercial Sale of a Third Party product in such country that contains, as one
of its active ingredients, the same Active Ingredient that is contained in the
Schering Non-Viral Product), or (iii) [**] following First Commercial Sale of
any Schering Non-Viral Product in such country which contains, as one of its
active ingredients, the same Active Ingredient as that which is contained in the
Schering Non-Viral Product.

              (c) Upon expiration of the royalty term for a Schering Non-Viral
Product in a country as described in Section 6.9(b), Schering shall thereafter
have a fully paid-up, non-exclusive license to PTC NV Know-How to make, have
made, use, sell, offer for sale, and import such Schering Non-Viral Product in
that country in the Non-Viral Field.

         6.10 Royalties Payable by PTC on Sales of PTC Products.

              (a) Royalty on Net Sales. As partial consideration for the rights
granted to PTC pursuant to Section 5.4(b), PTC shall pay to Schering, on a PTC
Product-by-PTC Product basis, a royalty in the amount of [**] percent ([**]%) of
Net Sales of such PTC Product. Notwithstanding the foregoing, PTC shall not be
required to pay Schering any royalties pursuant to this Section 6.10(a) with
respect to a PTC Product that contains a PTC Compound that is set forth in
Schedule 1.48 attached hereto but does not contain any other Collaboration
Compound.

              (b) PTC's obligation to pay royalties for any PTC Product pursuant
to Section 6.10(a) shall remain in effect on a country-by-country basis until
the later of (i) the expiration of the last to expire Schering NV Patent
(including any Joint Patent) in such country which contains a Valid Claim which
claims such PTC Product or its use in the Non-Viral Field, (ii) the expiration
of any Marketing Exclusivity for such PTC Product in such country (or, if
earlier, the date of the First Commercial Sale of a Third Party product in such
country that contains, as one of its active ingredients, the same Active
Ingredient that is contained in the PTC Product), or (iii) [**] following First
Commercial Sale of any PTC Product in such country which contains, as one of its
active ingredients, the same Active Ingredient as that which is contained in the
PTC Product.

              (c) Upon expiration of the royalty term for a PTC Product in a
country as described in Section 6.10(b), PTC shall thereafter have a fully
paid-up, non-exclusive license to Schering NV Know-How to make, have made, use,
sell, offer for sale, and import such PTC Product in that country in the
Non-Viral Field.

         6.11 Royalty Reports and Payments. Each Party shall make royalty
payments due the other under this Article 6 within [**] after the end of each
calendar quarter in which Net Sales


                                       45
<PAGE>
                                                               EXECUTION VERSION


occurred. A report summarizing the Net Sales of each Licensed Product during the
relevant quarter on a country-by-country basis shall be delivered to the other
Party within [**] following the end of each calendar quarter for which royalties
are due.

         6.12 Payments; Interest. Any payments due a Party under this Agreement
shall be due on such date as is specified in this Agreement and, in the event
such date is not a Business Day, then the next succeeding Business Day;
provided, however, that any expenses for which a Party is to be reimbursed under
this Agreement shall be payable within forty-five (45) days of the reimbursing
Party's receipt of an invoice detailing such expenses from the invoicing Party.
Any failure by a Party to make a payment within ten (10) Business Days after the
date when due shall obligate such Party to pay interest, the interest period
commencing on the due date and ending on the payment date. The applicable
interest rate shall be two percent (2%) above the average rate of the one (1)
month London Inter-Bank Offering Rate ("LIBOR") for Dollars, as quoted on the
British Banker's Association's website currently located at www.bba.org.uk (or
such other source as may be mutually agreed by the Parties) from time to time,
effective for the applicable days of the period of default. For clarity, it is
understood that the calculation of Net Sales will require an ongoing
reconciliation process, and no interest shall be payable under this Section 6.12
with respect to any adjustments that are made from the initial statement of Net
Sales, as applicable, for a particular calendar quarter so long as the
calculation of Net Sales that was reflected in the initial royalty statement for
such calendar quarter was made in good faith, and such adjustment is made on or
before the later of (x) twelve (12) months from the date of the initial
statement, and (y) three (3) months from the date that the applicable invoice or
statement underlying the adjustment is received by Schering or PTC or each of
their respective Affiliates or Sublicensees from the relevant Third Party (e.g.,
a Third Party payor in the case of a rebate).

         6.13 Taxes. Each Party shall pay any and all taxes levied on account of
all payments it receives under this Agreement. If laws or regulations require
that taxes be withheld, the paying Party will (a) deduct those taxes from the
remittable payment, (b) timely pay the taxes to the proper taxing authority, and
(c) send proof of payment to the other Party within thirty (30) days of receipt
of confirmation of payment from the relevant taxing authority. The paying Party
will reasonably cooperate with the other Party to obtain the benefit of any
applicable tax law or treaty, including the pursuit of any refund or credit of
such tax to the Party to whom payment is due.

         6.14 Additional Tax Matters. Each Party shall be entitled to all tax
benefits, including in particular, tax credits and/or tax deductions
attributable to amounts that such Party has funded regarding the Development of
Licensed Products. Each Party shall file any applicable national, regional, and
local tax returns on a basis consistent with this Agreement, and shall not take
any action inconsistent with the other Party's entitlement to such tax benefits.
In the event that a Party, in its reasonable judgment, determines that it must
obtain information and verification regarding the use or application of such
expenditures in order to prepare its tax returns or to respond to any inquiry
during a tax audit or any other inquiry relating to such treatment of its tax
return, or to defend its tax position in any proceeding including litigation,
the other Party shall reasonably cooperate with the requesting Party and furnish
it with such information as it may reasonably require at the requesting Party's
request and expense.


                                       46
<PAGE>
                                                               EXECUTION VERSION


      6.15 Payment Currency. Except as otherwise noted, or as mutually agreed in
writing by the Parties from time to time, all payments due hereunder will be
paid in Dollars. All payments shall be paid by wire transfer of immediately
available funds to an account at a commercial bank designated by the Party to
whom payment is due at least ten (10) Business Days before payment is due. For
the purposes of this Agreement, "Dollars" or "$" means United States Dollars.
Where Licensed Product is sold in a currency other than Dollars, conversion of
sales recorded in local currencies to Dollars will be performed in a manner
consistent with a Party's (or its Sublicensee's) normal practices used to
prepare its or their audited financial statements for internal and external
reporting purposes in accordance with GAAP.

      6.16 Schering' Records of Net Sales and Audits of the Same. Schering shall
maintain, and cause its Affiliates and Sublicensees to maintain, complete and
accurate records of all Net Sales of Schering Viral Products and Schering
Non-Viral Products. PTC shall have the right, through an internationally
recognized certified public accountant reasonably acceptable to Schering, and
following reasonable notice, to examine such records during regular business
hours; provided, however, that such examination shall not (i) be of records for
more than the prior three (3) years, (ii) take place more often than once in any
calendar year, and (iii) cover any records which date prior to the date of the
last examination. The sole purpose of such examination shall be to verify the
correctness of the calculations of Net Sales under this Agreement. PTC shall
bear its own costs related to such audit; provided, that if any examination
results in a finding of underpayments greater than five percent (5%) by Schering
for the period audited (or any one-year sub-period thereof), Schering shall pay
PTC the amount of the underpayment, interest at the rate specified in Section
6.12 from the time the amount was due, and PTC's out-of-pocket expenses incurred
in conducting the audit (provided, however, in no event shall Schering be
obligated to reimburse any expenses in excess of the amount of the
underpayment). For any underpayments less than five percent (5%) by Schering for
the period audited, Schering shall pay PTC the amount of such underpayment and
interest at the rate specified in Section 6.12 from the time the amount was due.
Any overpayments by Schering will be credited to future royalties due PTC under
this Agreement. Any records or accounting information received from Schering or
otherwise obtained during the audit process shall be part of Schering's
Confidential Information. Results of any audit carried out hereunder (including
without limitation any audit reports) shall be promptly provided to both Parties
and shall also be part of Schering's Confidential Information.

      6.17 PTC's Records of Net Sales and Audits of the Same. PTC shall
maintain, and cause its Affiliates and Sublicensees to maintain, complete and
accurate records of all Net Sales of PTC Products. Schering shall have the
right, through an internationally recognized certified public accountant
reasonably acceptable to PTC, and following reasonable notice, to examine such
records during regular business hours; provided, however, that such examination
shall not (i) be of records for more than the prior three (3) years, (ii) take
place more often than once in any calendar year, and (iii) cover any records
which date prior to the date of the last examination. The sole purpose of such
examination shall be to verify the correctness of the calculations of Net Sales
under this Agreement. Schering shall bear its own costs related to such audit;
provided, that if any examination results in a finding of underpayments greater
than five percent (5%) by PTC for the period audited (or any one-year sub-period
thereof), PTC shall pay Schering the amount of the underpayment, interest at the
rate specified in Section 6.12 from the time the amount was due, and Schering's
out-of-pocket expenses incurred in conducting the audit


                                       47
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                                                               EXECUTION VERSION

(provided, however, in no event shall PTC be obligated to reimburse any expenses
in excess of the amount of the underpayment). For any underpayments less than
five percent (5%) by PTC for the period audited, PTC shall pay Schering the
amount of such underpayment and interest at the rate specified in Section 6.12
from the time the amount was due. Any overpayments by PTC will be credited to
future royalties due Schering under this Agreement. Any records or accounting
information received from PTC or otherwise obtained during the audit process
shall be part of PTC's Confidential Information. Results of any audit carried
out hereunder (including without limitation any audit reports) shall be promptly
provided to both Parties and shall also be part of PTC's Confidential
Information.

                                   ARTICLE 7

                                 CONFIDENTIALITY

      7.1 Confidential Information. Except as expressly provided herein, the
Parties agree that, from the Effective Date until the fifth anniversary of the
expiration or termination of this Agreement, or for a period of [**] from the
Effective Date, whichever is the longer, the receiving Party shall keep
confidential and shall not publish or otherwise disclose to any Third Party and
shall not use for any purpose except for the purposes contemplated by this
Agreement any Confidential Information of the other Party which it receives or
learns pursuant to this Agreement, except to the extent that it can be
established by the receiving Party by competent proof that such Confidential
Information:

            (a)   is or becomes public or available to the general public
otherwise than through the act or default of the receiving Party or its
Affiliates;

            (b) is obtained by the receiving Party or its Affiliates from a
Third Party who is lawfully in possession of such Confidential Information and
is not subject to an obligation of confidentiality or non-use regarding the
Confidential Information owed to the disclosing Party or its Affiliates;

            (c)   is previously known to the receiving Party or its
Affiliates prior to disclosure under this Agreement, as shown by written
evidence; or

            (d) is independently developed by the receiving Party or its
Affiliates without the use of or reliance on any Confidential Information
provided by the disclosing Party hereunder, as shown by contemporaneous written
evidence.

      7.2 Public Domain. For the purposes of this Agreement, specific
information disclosed as part of the Confidential Information shall not be
deemed to be in the public domain or in the prior possession of the receiving
Party merely because it is embraced by more general information in the public
domain or by more general information in the prior possession of the receiving
Party.

      7.3 Legal Disclosure. If the receiving Party becomes legally required to
disclose any Confidential Information of the disclosing Party (whether in
response to a valid order of a court


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                                                               EXECUTION VERSION

or any governmental or regulatory body or otherwise required by Law), the
receiving Party will give the disclosing Party prompt notice of such fact so
that the disclosing Party may have an opportunity to obtain a protective order
or other appropriate remedy concerning such disclosure. The receiving Party will
reasonably cooperate with the disclosing Party in connection with the disclosing
Party's efforts to obtain any such order or other remedy, at the expense of the
disclosing Party. If any such order or other remedy does not fully preclude
disclosure, the receiving Party will make such disclosure only to the extent
that such disclosure is legally required and will use reasonable efforts to have
confidential treatment accorded to the disclosed Confidential Information.

      7.4 Permitted Use and Disclosures. Notwithstanding the provisions of
Section 7.1, each Party may disclose Confidential Information of the other Party
to its Affiliates, Sublicensees, consultants and outside contractors, on a
need-to-know basis and on the condition that such entities or persons agree to
confidentiality and non-use obligations with respect to the Confidential
Information that are substantially the same as those undertaken by the receiving
Party under this Article 7. In addition, either Party may disclose to Third
Parties Confidential Information disclosed to it by the other Party to the
extent such disclosure is (x) reasonably necessary in complying with applicable
governmental regulations, including submitting information to tax or other
governmental authorities, (y) reasonably necessary or useful in conducting
Development or Commercialization of Collaboration Compounds or Licensed Products
in accordance with the terms of this Agreement, or (z) reasonably necessary in
otherwise exercising its rights hereunder.

      7.5 Public Disclosure. In connection with the execution of this Agreement,
the Parties shall jointly issue one or more press releases, the contents of
which shall be substantially similar to Schedule 7.5, with such other contents
and changes as may be mutually agreed. Except as otherwise required by Law,
neither Party shall issue any additional press release or make any other public
disclosure concerning this Agreement or the subject matter hereof without first
providing the other Party with a copy of the proposed release or public
disclosure for review and comment, provided that such right of review and
comment shall only apply for the first time that specific information is to be
disclosed, and shall not apply to the subsequent disclosure of substantially
similar information that has previously been disclosed. The Party proposing to
make the press release or other public disclosure shall give due consideration
to any reasonable comments by the other Party relating to such proposed press
release or other public disclosure. The principles to be observed by Schering
and PTC in press releases or other public disclosures with respect to this
Agreement shall be: accuracy, compliance with applicable legal requirements, the
requirements of confidentiality under this Article 7 and normal business
practice in the pharmaceutical industry for disclosures by companies comparable
to Schering and PTC. For the avoidance of doubt, either Party may issue such
press releases as it determines, based on advice of counsel, are reasonably
necessary to comply with Law or for appropriate market disclosure. It is
understood, however, that unless required by Law, the Parties shall not disclose
the specific financial terms and conditions of this Agreement in any press
release or other public disclosure. In addition, if a public disclosure is
required by Law, including without limitation in a filing with the United States
Securities and Exchange Commission, the disclosing Party shall provide copies of
the proposed disclosure reasonably in advance of such filing or other disclosure
for the non-disclosing Party's prior review and comment and shall give due


                                       49
<PAGE>


                                                               EXECUTION VERSION

consideration to any reasonable comments by the non-filing Party relating to
such filing, including without limitation the provisions of this Agreement for
which confidential treatment should be sought.

      7.6 Termination of Prior Agreement. The Parties agree that as of the
Effective Date, all previously executed confidentiality agreements between the
Parties or any of their respective Affiliates, including without limitation the
Secrecy Agreement, dated July 18, 2003, as amended prior to the Effective Date,
and the Confidentiality Agreement, dated May 27, 2005, as amended prior to the
Effective Date, are hereby terminated and superseded by the provisions of this
Agreement, and any disclosures made by PTC under the terms of such prior
confidentiality agreements shall be deemed to have been made under, and governed
solely by, the confidentiality terms of this Agreement.

      7.7 Publications. Each Party recognizes the mutual interest of the Parties
in obtaining valid patent protection and, to the extent practicable, providing
the other Party with advance notice of any publications relating to
Collaboration Compounds and Licensed Products. Consequently, if a Party or its
Affiliates wishes to publish (including any oral disclosure made in a public
forum without obligation of confidentiality) any data or other information
related to Collaboration Compounds or Licensed Products developed by or on
behalf of such Party or its Affiliates (the "Publishing Party"), it shall
transmit to the other Party (the "Reviewing Party") a copy of the proposed
written publication and/or a written summary of the proposed oral disclosure at
least thirty (30) days prior to submission of the publication or abstract or
oral disclosure. The Reviewing Party shall have the right to (a) request a delay
in submission of the publication or presentation in order to protect patentable
information, and (b) propose modifications to the publication for patent
reasons. With respect to publications or disclosures by investigators or other
Third Parties, such publications and disclosures shall be subject to review by
the Reviewing Party under this Section 7.7 only to the extent that the
Publishing Party has the right to do so. The provisions of this Section 7.7
shall not be applicable to any publications by a Party regarding a particular
Licensed Product being Developed by it following such Party's election to
initiate clinical Development for such Licensed Product under this Agreement. It
is understood that in no event shall a Party disclose the structures of any
Collaboration Compound being Developed by the other Party in any publication or
other public forum without the prior written consent of the Developing Party;
provided, however, the foregoing shall not preclude a Party from including such
structures in any patent applications that are filed and prosecuted in
accordance with the provisions of Article 9. In addition, each Party shall
acknowledge the scientific contributions of the other Party in any written
publication with respect to a Collaboration Compound or a Licensed Product.

      7.8 Delay. If the Reviewing Party requests a delay as described in Section
7.7 above, the Publishing Party shall delay submission or presentation of the
publication for a period of forty-five (45) days from the date of such request
to enable patent applications protecting each Party's rights in such information
to be filed. Upon the expiration of forty-five (45) days from transmission of
such proposed disclosures to the Reviewing Party, the Publishing Party shall be
free to proceed with the written publication or the oral presentation unless the
Reviewing Party has requested the delay described above. If a trade secret that
is the subject of a request made


                                       50
<PAGE>


                                                               EXECUTION VERSION

under Section 7.7 cannot be otherwise protected without unreasonable expense to
the Reviewing Party, such information shall be omitted from the publication.

      7.9 Confidential Terms. Except as otherwise required by Law, the terms of
this Agreement shall be considered Confidential Information of each Party.
Notwithstanding the provisions of Section 7.1, each Party shall be entitled to
disclose the terms of this Agreement to a Party's or its Affiliates'
accountants, attorneys and other professional advisors, and any existing or
potential bona fide investors, lenders, or acquirors, on the condition that such
entities or persons agree to keep such terms confidential for the same time
periods and to the same extent as such Party is required to keep such terms
confidential.

                                    ARTICLE 8

                         REPRESENTATIONS AND WARRANTIES

      8.1 PTC. PTC represents and warrants that: (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of PTC; (iii)
it has the right to grant the rights and licenses granted to Schering herein
(including without limitation the Schering Licenses); (iv) none of the
execution, delivery or performance of this Agreement will conflict with, or
result in a breach under any agreement, instrument or understanding, oral or
written, to which it or its Affiliates is a party or by which it or its
Affiliates may be bound; (v) this Agreement constitutes a legal, valid and
binding obligation of PTC, enforceable in accordance with its terms; and (vi)
PTC has obtained all necessary consents, approvals and authorizations of all
government authorities and other Third Parties required to be obtained by PTC or
its Affiliates in connection with the execution, delivery and performance of
this Agreement.

      8.2 Schering. Schering represents and warrants that: (i) it is a
corporation duly organized, validly existing and in good standing under the laws
of Switzerland; (ii) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
Schering; (iii) it has the right to grant the rights and licenses granted to PTC
herein; (iv) none of the execution, delivery or performance of this Agreement
will conflict with, or result in a breach under any agreement, instrument or
understanding, oral or written, to which it or its Affiliates is a party or by
which it or its Affiliates may be bound; (v) this Agreement constitutes a legal,
valid and binding obligation of Schering, enforceable in accordance with its
terms; and (vi) Schering has obtained all necessary consents, approvals and
authorizations of all government authorities and other Third Parties required to
be obtained by Schering or its Affiliates in connection with the execution,
delivery and performance of this Agreement.


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<PAGE>


                                                               EXECUTION VERSION

      8.3 Knowledge of Pending Litigation. Each Party represents and warrants to
the other Party as of the Effective Date that, to its knowledge, there is no
claim, investigation, suit, action or proceeding pending or threatened against
it before or by any court, governmental entity or arbitrator that, individually
or in the aggregate, could reasonably be expected to materially impair the
ability of such Party to perform any obligation under this Agreement.

      8.4 Additional Representations and Warranties of PTC. PTC further
represents and warrants to Schering, as of the Effective Date, as follows:

            (a) To the best of its knowledge, Schedule 1.48 contains a complete
and accurate list of all PTC Compounds.

            (b) Taken together, Schedule 1.47A and Schedule 1.53 contain a
complete and accurate list of all Patents that are Controlled by PTC or any of
its Affiliates that are relevant to the Research of a Viral IRES Inhibitor.
Except as disclosed on Schedule 1.47A the Patents listed on Schedule 1.47A are
owned by PTC free and clear of any liens, charges, claims and encumbrances, and
no other person, corporate or other private entity, or governmental or
university entity or subdivision thereof has any claim of ownership or right to
obtain compensation with respect to such Patents.

            (c) Schedule 1.53 contains a complete and accurate list of all
Patents that are Controlled by PTC or any of its Affiliates that are relevant to
the Development, Manufacture, use or Commercialization of Collaboration
Compounds in the Field. Schedule 8.4(c) is a list of all agreements between PTC
or its Affiliates and any Third Party relating to any of the PTC Compounds
listed on Schedule 1.48. The Patents listed on Schedule 1.53 are owned by PTC
free and clear of any liens, charges, claims and encumbrances, and no other
person, corporate or other private entity, or governmental or university entity
or subdivision thereof has any claim of ownership or right to obtain
compensation with respect to such Patents.

            (d) Except as disclosed on Schedule 1.47A, there are no Patents or
Know-How owned or licensed by PTC or its Affiliates as of the Effective Date
that may be relevant to the Research of a Viral IRES Inhibitor that are not
Controlled by PTC.

            (e) There are no Patents or Know-How owned or licensed by PTC or its
Affiliates as of the Effective Date that may be relevant to the Development,
Manufacture, use or Commercialization of Collaboration Compounds in the Field
that are not Controlled by PTC.

            (f) To the best of PTC's knowledge, the conception, development and
reduction to practice of the PTC Intellectual Property, and the identification
and synthesis of the PTC Compounds, has not constituted or involved the
misappropriation of trade secrets of any Third Party.

            (g) To the best of PTC's knowledge, the importation, manufacture,
use and sale of PTC Compounds in the Field does not and will not infringe the
Patent rights or other intellectual property rights of any Third Party.

            (h) To the best of PTC's knowledge, none of the PTC Patents is
invalid or


                                       52
<PAGE>


                                                               EXECUTION VERSION

unenforceable. No claim has been made against PTC or its Affiliates asserting
the invalidity, misuse, unregisterability, unenforceability or non-infringement
of any of the PTC Patents or challenging its or its Affiliates' rights to use or
ownership of any of the PTC Patents or making any adverse claim of ownership
thereof. It is understood, however, that PTC does not warrant that any PTC
Patent will be granted or upheld if its validity or enforceability is contested.

            (i) PTC has maintained the PTC Patents in full force and effect,
including without limitation by paying all maintenance fees associated with such
patents. PTC has complied in all material respects with all applicable laws,
rules and regulations during the course of its filing and prosecution of the PTC
Patents in the Territory, including without limitation all rules of the United
States Patent and Trademark Office ("USPTO") and any regulations applicable to
the filing and prosecution of Patent rights before the USPTO.

            (j) Prior to the date hereof, PTC has not conducted any Research
with the intent of synthesizing or identifying Active Compounds except as part
of its medicinal chemistry program directed at viral IRES inhibitors.

      8.5 Additional Representations and Warranties of Schering. To the best of
its knowledge, Schedule 1.67 contains a complete and accurate list of all
Schering Compounds existing as of the Effective Date.

      8.6 Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT NOTHING IN
THIS AGREEMENT IS OR SHALL BE CONSTRUED AS A WARRANTY OR REPRESENTATION BY
EITHER PARTY AS TO THE VALIDITY OR SCOPE OF ANY PTC PATENT OR SCHERING PATENT OR
A REPRESENTATION OR WARRANTY BY EITHER PARTY OF THE ACCURACY, SAFETY, OR
USEFULNESS FOR ANY PURPOSE OF ANY INTELLECTUAL PROPERTY AT ANY TIME MADE
AVAILABLE TO THE OTHER PARTY.

                                    ARTICLE 9

                              INTELLECTUAL PROPERTY

      9.1   Ownership and Disclosure of Program Inventions.  All right, title
and interest in all Program Inventions shall be owned as follows:

            (a)   PTC shall own all Program Inventions that are Invented
solely by one or more employees, agents or consultants of PTC or its
Affiliates;

            (b)   Schering shall own all Program Inventions that are Invented
solely by one or more employees, agents or consultants of Schering or its
Affiliates; and

            (c) PTC and Schering shall jointly own all Program Inventions that
are Invented by one or more employees, agents or consultants of PTC or its
Affiliates, together with one or more employees, agents or consultants of
Schering or its Affiliates (together, the "Joint Inventions").


                                       53
<PAGE>


                                                               EXECUTION VERSION

In the event of a dispute regarding inventorship, the Parties shall resolve such
dispute through referral to binding arbitration by a single arbitrator mutually
agreed by the Parties under the Commercial Arbitration Rules of the American
Arbitration Association (or such other arbitral body and rules as the Parties
may mutually agree), and the arbitrator's judgment on inventorship shall be
binding on the Parties and may be enforced by application to any governmental
entity or court having jurisdiction thereof. The Parties acknowledge that the
ownership rights set out in this Section 9.1 are subject to the licenses and
other rights granted to and obligations of each Party pursuant to Article 4A,
Article 5, Article 6 and Section 11.7 of this Agreement. Subject to the licenses
and other rights granted to and obligations of each Party pursuant to Article
4A, Article 5, Article 6 and Section 11.7 and the provisions of Section 2.10,
each Party shall be free to use and exploit (which shall include the right to
grant licenses under such Parties' interest therein) the Joint Patents, without
any duty of accounting to the other Party except with respect to the payment
obligations under Article 6 and Section 11.7.

In order to protect the Parties' patent rights under U.S. law in any inventions
Invented in the performance of the Research Program, each Party agrees to
maintain a policy which requires its employees or others acting on behalf of
such Party or its Affiliates or licensees to record and maintain all data and
information developed during the Research Program in such a manner as to enable
the Parties to use such records to establish the earliest date of invention
and/or diligence to reduction to practice (an "Invention Policy"). Such
Invention Policy shall, among other things, provide that such individuals are
(i) to record all inventions generated by them in standard laboratory notebooks
(or electronic equivalents that meet the requirements of applicable Law) that
are dated and corroborated by non-inventors on a regular, contemporaneous basis,
and (ii) to complete invention disclosure memorandums or similar documents with
respect to any invention first identified, discovered, conceived, developed, or
reduced to practice by them. At regularly scheduled meetings of the Joint Patent
Team and promptly in response to a written request from the other Party, each
Party shall disclose to the other Party all Program Inventions disclosed to it
and its Affiliates pursuant to such Invention Policy, as well as any other
Program Inventions that come to its attention and that are Invented by employees
or others acting on its behalf or its Affiliates.

      9.2 Assignment of Program Inventions by Employees, Agents or Independent
Contractors. Each Party agrees that all of its employees or its Affiliates
employees acting on its or its Affiliates' behalf in conducting Research under
the Research Plan, or Development, Manufacturing, or Commercialization
activities with respect to Licensed Products, shall be obligated to assign to
such Party, or as such Party shall direct, all Program Inventions Invented by
such employees. In the case of non-employees working on behalf of a Party or its
Affiliates in connection with the Research Plan, that Party shall endeavor to
obtain either an assignment or license establishing its Control of all Program
Inventions Invented by such non-employees. Each Party agrees that it will use
reasonable efforts to ensure that any employees, agents, or independent
contractors in their employ or who are hired or retained by it to perform or
manage performance of any activities required pursuant to this Agreement will
comply with the applicable Invention Policy and promptly disclose to it any
Program Inventions.

      9.3   Patent Prosecution and Related Activities.


                                       54
<PAGE>


                                                               EXECUTION VERSION

            (a) Schering Patents. Schering shall be responsible, at its sole
expense, for preparing, filing, prosecuting, handling any interferences, and
maintaining Schering Patents (excluding Joint Patents). PTC shall have full
rights of consultation with Schering and the patent counsel selected by Schering
in all matters related to the Schering NV Patents. Schering shall use reasonably
diligent efforts to implement all reasonable requests made by PTC with regard to
the preparation, filing, prosecution and/or maintenance of such Schering NV
Patents.

            (b) PTC Patents. PTC shall be primarily responsible for preparing,
filing, prosecuting, handling any interferences, and maintaining those PTC
Patents (excluding Joint Patents) that are relevant to the Development,
Manufacturing or Commercialization of Highly Active Collaboration Compounds,
Schering Field NV Compounds or Schering Viral Products in the Field (the "PTC
Licensed Compound Patents"). Schering shall have full rights of consultation
with PTC and the patent counsel selected by PTC in all matters related to the
PTC Licensed Compound Patents. All strategic decisions related to the
preparation, filing, prosecuting, handling of any interferences and maintaining
such PTC Licensed Compound Patents shall be subject to the mutual agreement of
the Parties. The reasonable out-of-pocket costs and expenses incurred following
the Effective Date in connection with the preparation, filing, prosecuting,
handling any interferences and maintaining such PTC Licensed Compound Patents
[**]. PTC shall be responsible, at its sole expense, for preparing, filing,
prosecuting, handling any interferences, and maintaining any PTC Patents
(excluding Joint Patents) that are not PTC Licensed Compound Patents. Schering
shall have full rights of consultation with PTC and the patent counsel selected
by PTC in all matters related to the PTC NV Patents. PTC shall use reasonable
diligent efforts to implement all reasonable requests made by Schering with
regard to the preparation, filing, prosecution and/or maintenance of such PTC NV
Patents.

            (c) Joint Patents. Schering shall be primarily responsible for
preparing, filing, prosecuting, handling any interferences, and maintaining
Joint Patents. PTC shall have full rights of consultation with Schering and the
patent counsel selected by Schering in all matters that are related to the
prosecution of the Joint Patents. All strategic decisions related to the
preparation, filing, prosecuting, handling of any interferences and maintaining
such Joint Patents shall be subject to the mutual agreement of the Parties. The
reasonable out-of-pocket costs and expenses incurred in filing, prosecuting,
handling any interferences with respect to, and maintaining any Joint Patents
shall be shared equally by the Parties on an ongoing basis.

            (d) Permitted Disclosures. Subject to the prior consent of the other
Party, not to be unreasonably withheld, a Party shall be entitled to disclose in
the specification of a patent application filed by it pursuant to this Agreement
any Know-How owned by the other Party to the extent reasonably necessary to
support and enable claims in such Patent applications.

            (e) Joint Patent Team; Related Matters. Following the Effective
Date, the Parties shall form a joint team consisting of at least one
representative from each Party's patent or legal department in order to oversee
the filing, prosecution, any interferences, and maintenance of the PTC Licensed
Compound Patents, PTC NV Patents, Joint Patents, and Schering NV Patents
(collectively, "Collaboration Patents") as contemplated by this Article 9 (the
"JPT"). The JPT shall meet as needed during the Term, but no less than
semi-annually


                                       55
<PAGE>


                                                               EXECUTION VERSION

(unless otherwise agreed by the Parties), and shall participate in and report to
regular meetings of the JSC as requested by the JSC. Following a termination of
this Agreement under Article 11, the JPT shall survive until there are no
further actual prosecutions or potential prosecutions of any Collaboration
Patents, at which time the JPT shall automatically terminate.

      9.4 Cooperation; Request to Responsible Party. Each of PTC and Schering
shall keep the other Party fully informed as to the filing and prosecution of
the Collaboration Patents for which it is the responsible prosecuting Party,
including, without limitation, by providing the other Party with the opportunity
to fully review and comment on any documents which will be filed in any patent
office as far in advance of the applicable filing date as feasible, and
providing the other Party with copies of any documents that such Party receives
from such patent offices promptly after receipt, including notice of all
interferences, reissues, re-examinations, oppositions or requests for patent
term extensions. PTC and Schering shall each reasonably cooperate with and
assist the other at its own expense in connection with such activities, at the
other Party's request. Notwithstanding anything in this Section 9.4 to the
contrary, but subject to the provisions of Section 9.3, each Party shall always
be entitled to proceed with any submission or other contemplated action if it
determines time is of the essence, provided that it makes reasonable efforts to
inform the other Party as early as practicable and to consider in good faith its
comments where applicable.

      9.5 Election Not to Prosecute. Upon sixty (60) days prior written notice
to the other Party, the Party that is responsible for prosecuting a particular
Collaboration Patent pursuant to the provisions of Section 9.3 may elect to
discontinue the prosecution of any Patent applications relating to such
Collaboration Patent and/or not to file or conduct any further activities with
respect to such Collaboration Patent. In the event the responsible Party
declines to file or, having filed, fails to further prosecute or maintain any
Collaboration Patent filed pursuant to Section 9.3(a), 9.3(b) or 9.3(c) or to
conduct any interferences, re-examinations, reissues, or oppositions with
respect thereto, the other Party shall have the right to prepare, file,
prosecute and maintain such Collaboration Patent in such countries as it deems
appropriate, and conduct any interferences, re-examinations, reissues or
oppositions related thereto at its sole expense. The Party that elected to
discontinue patent prosecution activities pursuant to this Section 9.5 agrees to
cooperate in any manner reasonably requested in connection with any such actions
by such Party, at the expense of the requesting Party, and shall assign all
right, title and interest in and to such Patent to the Party continuing such
activities.

      9.6   Third Party Infringement.

            (a) Notification of Infringement. Should any Third Party infringe,
or reasonably appear to be infringing, any Collaboration Patent, the Party
learning of such infringement or potential infringement shall promptly notify
the other Party upon learning of the same.

            (b) Right to Enforce Collaboration Patents. Schering shall have the
primary right, at its expense, to initiate and direct legal action to enforce
the Collaboration Patents (excluding Schering NV Patents) against infringement
or misappropriation by Third Parties, as well as to defend any action or
proceeding relating to the invalidity or unenforceability of such


                                       56
<PAGE>
                                                               EXECUTION VERSION

Patents. PTC shall have the primary right, at its expense, to initiate and
direct legal action to enforce the Schering NV Patents against infringement or
misappropriation by Third Parties, as well as to defend any action or proceeding
relating to the invalidity or unenforceability of such Patents.

            (c) Right to Enforce Other Patents. Except as provided in Section
11.7(c)(iv), Schering shall have the sole right to initiate and direct legal
action to enforce the Schering Patents (to the extent they are not Collaboration
Patents) and the Schering Background Patents against infringement or
misappropriation by Third Parties, as well as to defend any action or proceeding
relating to the invalidity or unenforceability of such Patents. PTC shall have
the sole right to initiate and direct legal action to enforce the PTC Patents
(to the extent they are not Collaboration Patents) and the PTC Background
Patents against infringement or misappropriation by Third Parties, as well as to
defend any action or proceeding relating to the invalidity or unenforceability
of such Patents.

            (d) Failure to Enforce Collaboration Patents. If within forty-five
(45) days (or such shorter period as is required to enable a Party to comply
with deadlines provided by applicable Law) following receipt of written notice
of an infringement of a Collaboration Patent (or written notice of an action or
proceeding alleging invalidity or unenforceability of such Collaboration
Patent), the Party that has the primary right to prosecute infringers of such
Patent pursuant to Section 9.6(b) fails to take action to halt such alleged
infringement by filing suit against the alleged infringer or taking other
appropriate action (e.g., initiating discussions with the infringing Third
Party) or to defend such an action or proceeding, the other Party may, at its
expense, take such legal action as it deems appropriate, in its own name, to
halt such an alleged infringement or defend such an action or proceeding. Each
Party agrees to render such reasonable assistance as the prosecuting Party may
request, including without limitation joining as a party if necessary for the
maintenance of the legal action. The prosecuting Party shall retain its rights
under Section 9.6(b) to initiate patent infringement litigation with respect to
an infringer of a Collaboration Patent if it places such infringer on proper
legal notice that such infringer's infringing activities will be addressed in a
legal action initiated subsequent to the resolution of another infringement
action involving a Collaboration Patent.

            (e) No Settlement Without Consent. Neither Party shall enter into
any settlement of any claim, suit or proceeding under Sections 9.6(b) or 9.6(d)
which admits or concedes that any aspect of the Collaboration Patents are
invalid or unenforceable without the prior written consent of the other Party.

            (f) Cooperation. Each Party shall keep the other reasonably informed
of the progress of any claim, suit or proceeding subject to Sections 9.6(b) or
9.6(d) and cooperate reasonably in connection with such activities at the
request and expense of the Party involved in such claim, suit or proceeding.
Each Party may be represented by counsel of its own selection at its own expense
in any suit or proceeding brought by the other Party to restrain or obtain
monetary damages for infringement by any Third Party of any Patents owned
(solely or jointly) by it; provided, however, the foregoing shall not affect the
right to control such litigation by the Party which has instituted it.


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            (g) Retention of Recoveries. All amounts recovered from a Third
Party pursuant to this Section 9.6 shall be used first to reimburse the
reasonable costs and expenses (including reasonable attorney's fees and costs)
of the Party prosecuting or defending such action (including any settlement
negotiation or proceeding). With respect to any recovery for infringement of a
Collaboration Patent (i) if Schering initiated and prosecuted the action
pursuant to Section 9.6(b) or (d), Schering shall receive [**] percent ([**]%)
of the remaining amount and PTC shall receive the balance of such remaining
amount, and (ii) if PTC initiated and prosecuted the action pursuant to Section
9.6(b) or (d), PTC shall receive [**] percent ([**]%) of the remaining amount
and Schering shall receive the balance of such remaining amount. With respect to
any recovery for infringement of a Patent that is not a Collaboration Patent,
except as provided in Section 11.7(c)(iv), the Party which owns such Patent
shall receive [**] percent ([**]%) of such remaining amount.

      9.7   Infringement Claims by Third Parties.

            (a) Infringement Claims Related to Schering Viral Products. In the
event that a Third Party sues PTC, Schering, or any of their Affiliates or any
Sublicensee alleging that Schering's or its Affiliates' or Sublicensees' making,
using, importing, selling or offering to sell a Highly Active Collaboration
Compound, Schering Field NV Compound, or Schering Viral Product during the Term
infringes or will infringe claims in said Third Party's Patents, Schering shall
be responsible for defending such claim, suit or proceeding in accordance with
the provisions of Section 10.2(ii) and 10.3. If, as a result of a judgment in
the litigation or settlement with the Third Party, Schering or its Affiliates or
Sublicensees is required to pay to such Third Party royalties or other
consideration related to such Third Party's Patents which claim the composition
of matter of a Highly Active Collaboration Compound or Schering Field NV
Compound, the use of a Highly Active Collaboration Compound or Schering Field NV
Compound in the Field, or a method of treating, diagnosing or preventing any
disease or condition through the use of a Highly Active Collaboration Compound
or Schering Field NV Compound, or a method of manufacturing a Highly Active
Collaboration Compound or Schering Field NV Compound, Schering may treat such
payments as royalties payable under Third Party License Agreements for purposes
of Section 6.7(b), subject to the limits set forth in Section 6.8.

            (b) Infringement Claims Related to Schering Non-Viral Products. In
the event that a Third Party sues PTC, Schering, or any of their Affiliates or
any Sublicensee of Schering alleging that Schering's or its Affiliates' or
Sublicensees' making, using, importing, selling or offering to sell a Schering
Non-Viral Product, or a NV Compound contained therein, infringes or will
infringe claims in said Third Party's Patents, Schering shall be responsible for
defending any such claim, suit or proceeding in accordance with the provisions
of Section 10.2(ii) and Section 10.3.

            (c) Infringement Claims Related to PTC Products. In the event that a
Third Party sues Schering, PTC, or any of their Affiliates or any Sublicensee of
PTC alleging that PTC's or its Affiliates' or Sublicensees' making, using,
importing, selling or offering to sell a PTC Product, or a NV Compound contained
therein, infringes or will infringe claims in said Third Party's Patents, PTC
shall be responsible for defending any such claim, suit or proceeding in
accordance with the provisions of Section 10.1(ii) and Section 10.3.


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                                                               EXECUTION VERSION

      9.8 Certification Under Drug Price Competition and Patent Restoration Act.
Each Party shall immediately give written notice to the other Party of any
certification of which they become aware filed pursuant to 21 U.S.C. Section
355(b)(2)(A) (or any amendment or successor statute thereto) claiming that any
Collaboration Patent is invalid or unenforceable, or that infringement will not
arise from the manufacture, use, importation or sale of a product containing a
Collaboration Compound by a Third Party.

      9.9 Listing of Patents. With respect to any Schering Viral Products or
Schering Non-Viral Products, Schering shall have the sole right to determine
which of the PTC Patents, PTC NV Patents, Joint Patents, and Schering Patents,
if any, shall be listed for inclusion in the Approved Drug Products with
Therapeutic Equivalence Evaluations pursuant to 21 U.S.C. Section 355, or any
successor law in the United States, together with any comparable laws or
regulations in any other country in the Territory. With respect to any PTC
Products, PTC shall have the sole right to determine which of the PTC Patents,
Joint Patents, Schering NV Patents, and Schering Patents, if any, shall be
listed pursuant to such Laws.

      9.10 Diligence With Respect to Marketing Exclusivity and Patent Term
Extensions. Each Party shall use Commercially Reasonable Efforts to secure any
available forms of Marketing Exclusivity and extensions of patent term as may be
available in a particular country or region for any Licensed Product that is
being Commercialized by it or its Affiliates or Sublicensees.

                                   ARTICLE 10

                                 INDEMNIFICATION

      10.1 PTC. PTC shall indemnify, defend and hold harmless Schering, its
Affiliates, and each of their respective directors, officers, employees and
agents (each a "Schering Indemnitee") from and against any and all liabilities,
damages, losses, costs and expenses (including reasonable attorneys' and
professional fees and other expenses of litigation and/or arbitration) (a
"Liability") resulting from a claim, suit or proceeding made or brought by a
Third Party against a Schering Indemnitee arising from or occurring as a result
of (i) any breach of the representations and warranties of PTC set forth in
Article 8, (ii) the practice by PTC of any rights granted pursuant to Section
5.4(b) or 11.7(b) (including, without limitation, claims arising from or
occurring as a result of PTC's or any Third Party's Development, testing,
Manufacture, importation, use, offer for sale, sale or other distribution of a
PTC Product or a Schering Viral Product pursuant to the exercise of such
licenses), (iii) the use by PTC or any of its Affiliates of any Materials
provided by Schering, or (iv) the negligence or willful misconduct of PTC,
except, (A) in the case of Subsections 10.1(i) and 10.1(iv), to the extent such
Liability results from the negligence or willful misconduct of Schering, and (B)
in the case of Subsection 10.1(iii), to the extent such Liability results from
the breach of any warranty provided by Schering pursuant to Section 2.9.

      10.2 Schering. Schering shall indemnify, defend and hold harmless PTC, its
Affiliates

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                                                               EXECUTION VERSION

and each of their respective directors, officers, employees and agents (each a
"PTC Indemnitee") from and against any and all Liability resulting from a claim,
suit or proceeding made or brought by a Third Party against a PTC Indemnitee
arising from or occurring as a result of (i) any breach of the representations
and warranties of Schering set forth in Article 8, (ii) any Development,
testing, Manufacture, importation, use, offer for sale, sale or other
distribution of any Licensed Product by Schering or its Affiliates and
Sublicensees (including, without limitation, product liability claims), (iii)
the use by Schering, its Affiliates or Sublicensees of any Materials provided by
PTC, or (iv) the negligence or willful misconduct of Schering, except, (A) in
the case of Subsections 10.2(i) or 10.2(iv), to the extent such Liability
results from the negligence or willful misconduct of PTC, and (B) in the case of
Subsection 10.2(iii), to the extent such Liability results from the breach of
any warranty provided by PTC pursuant to Section 2.9.

      10.3 Procedure. In the event that any Indemnitee intends to claim
indemnification under this Article 10 it shall promptly notify the other Party
(the "Indemnitor") in writing of the claim, suit or proceeding. The Indemnitor
shall have the sole right to control the defense and settlement thereof;
provided, however, the indemnifying Party will not, absent the consent of the
indemnified Party (which consent will not be unreasonably withheld or delayed),
consent to the entry of any judgment or enter into any settlement (x) that
provides for any relief other than the payment of monetary damages for which the
indemnifying Party shall be solely liable, or (y) where the claimant or
plaintiff does not release the indemnified Party from all liability in respect
thereof. The Indemnitee shall cooperate with the Indemnitor and its legal
representatives in the investigation and defense of any action, claim or
liability covered by this Article 10. The Indemnitee shall not, except at its
own cost, voluntarily make any payment or incur any expense with respect to any
claim or suit without the prior written consent of the Indemnitor, which the
Indemnitor shall not be required to give. In no event shall a Party be liable
pursuant to this Article 10 for any claims that are compromised or settled
without its prior written consent.

                                   ARTICLE 11

                              TERM AND TERMINATION

      11.1 Term. The term of this Agreement (the "Term") shall commence on the
Effective Date and, unless earlier terminated as provided in this Article 11,
shall continue in full force and effect on a country-by-country and Licensed
Product-by-Licensed Product basis until there are no remaining royalty payment
obligations in such country with respect to such Licensed Product, at which time
the Agreement shall expire in its entirety with respect to such Licensed Product
in such country. The Term shall expire on the date the Agreement has expired
with respect to all Licensed Products in all countries in the Territory.

      11.2 Schering's Unilateral Termination Right. At any time following the
date that is three (3) years after the Effective Date, Schering shall have the
right to terminate this Agreement, at any time and for any reason, upon [**]
prior written notice to PTC; provided, however, in the event that Schering has
not designated a Development Candidate within two (2) years following the
Effective Date, then Schering shall have the right to terminate this

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                                                               EXECUTION VERSION

Agreement pursuant to this Section 11.2 at any time after the date that is two
(2) years after the Effective Date. In the event that Schering terminates this
Agreement pursuant to the provisions of this Section 11.2, the provisions of
Section 11.7 shall be applicable.

      11.3 Termination for Cause. In the event of a material breach of this
Agreement by a Party, the other Party shall be entitled to give the Party in
default notice requiring it to cure such default. If such material breach is not
cured within sixty (60) days after receipt of such notice, the notifying Party
shall be entitled (without prejudice to any of its other rights conferred on it
by this Agreement) to terminate this Agreement by giving written notice to the
defaulting Party, with such termination to take effect immediately.
Notwithstanding the foregoing, in the event of a default which is curable, if
the material breach is not reasonably capable of being cured within the sixty
(60) day cure period and the defaulting Party is making a good faith effort to
cure such default, the notifying Party may not terminate this Agreement for so
long as the defaulting Party is diligently pursuing a cure; provided, however,
that the breaching Party shall lose its right to continue to cure pursuant to
this sentence if at any time such Party ceases to make a good faith effort to
cure such default. The right of either Party to terminate this Agreement as
herein above provided shall not be affected in any way by its waiver of, or
failure to take action with respect to, any previous default. Notwithstanding
the foregoing, if the material breach relates only to a specific Licensed
Product in a specific country or group of countries, then any termination
pursuant to this Section 11.3 shall apply only to the affected Licensed Products
or countries. Termination of this Agreement pursuant to this Section 11.3 shall
automatically be stayed pending the outcome of any dispute resolution
proceedings initiated pursuant to Article 12 that relate to the subject matter
of such termination. In the event of a termination under this Section 11.3 by
PTC, the provisions of Section 11.7 shall be applicable, and in the event of a
termination under this Section 11.3 by Schering, the provisions of Section 11.8
shall be applicable.

      11.4 Termination for Insolvency. This Agreement may be terminated by a
Party upon written notice to the other Party in the event that (i) the other
Party shall make an assignment for the benefit of its creditors, file a petition
in bankruptcy, petition or apply to any tribunal for the appointment of
custodian, receiver, or any trustee for it or a substantial part of its assets,
or shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (ii) if there shall
have been filed against the other Party any such bona fide petition or
application, or any such proceeding shall have been commenced against it, in
which an order for relief is entered or which remains undismissed or unstayed
for a period of ninety (90) days or more; or (iii) if the other Party by any act
or omission shall indicate its consent to, approval of or acquiescence in any
such petition, application or proceeding or order for relief or the appointment
of a custodian, receiver or trustee for it or any substantial part of its
assets, or shall suffer any such custodianship, receivership or trusteeship to
continue undischarged or unstayed for a period of ninety (90) days or more; or
(iv) anything analogous to any of the foregoing occurs in any applicable
jurisdiction. Termination shall be effective upon the date specified in such
notice. In the event of a termination under this Section 11.4 by PTC, the
provisions of Sections 5.7 and 11.7 shall be applicable, and in the event of a
termination under this Section 11.4 by Schering, the provisions of Section 5.7
and 11.8 shall be applicable.

      11.5  Additional Terminations.


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                                                               EXECUTION VERSION

            (a) Termination for Futility. If during the Research Term, the
Parties mutually determine, in good faith, that the pursuit of Viral IRES
Inhibitors for use in the Viral Field is impracticable for scientific or
commercial reasons, or that the Research Program is not likely to lead to a
Development Candidate, then upon such determination the Parties shall terminate
this Agreement. Upon termination of this Agreement pursuant to this Section
11.5(a), each Party shall as promptly as practicable provide to the other Party
all copies of all data, reports, records and materials in its possession or
control which relate to Collaboration Compounds or the Research Program and
which have not previously been disclosed to the other Party (provided that the
provision to a Party of the foregoing copies shall not be deemed to create any
additional rights or licenses in any such copies or the intellectual property
embodied therein, and such Party's rights to use or exploit such information and
rights shall be solely as expressly granted by the disclosing Party to the other
Party elsewhere in the Agreement and, with respect to Joint Know-How or Joint
Patents, those rights of the receiving Party as a joint owner). In the event of
a termination pursuant to this Section 11.5(a), (i) Schering's rights under the
licenses granted to it pursuant to Sections 5.1(a), 5.1(b) and 5.2 shall
terminate, (ii) all Highly Active Collaboration Compounds shall thereafter be
deemed to be NV Compounds, (iii) the Parties' licenses under the rights granted
to each of them pursuant to Article 4A and Sections 5.3, 5.4 and 5.5(c) and
5.5(d) shall survive termination, and (iv) in addition to the provisions set
forth in Section 11.10, the provisions of Sections 6.7(d), 6.7(e), 6.7(f), and
6.9 through and including 6.17 shall continue to apply with respect to
Schering's Development and Commercialization of Schering NV Products and PTC's
Development and Commercialization of PTC Products.

            (b) Termination due to Publication of Third Party Patent Rights. In
the event that, during the Research Term, a Patent (including without limitation
a patent application) owned by a Third Party is either granted or published in a
Major Market and such Patent claims (A) the composition of matter of, or
pharmaceutical preparations containing, a substantial portion of the Highly
Active Collaboration Compounds, or (B) the use of Highly Active Collaboration
Compounds or pharmaceutical preparations containing Highly Active Collaboration
Compounds in the Viral Field (a "Blocking Patent"), then the Parties shall
confer in good faith and endeavor to agree upon an appropriate course of action.
As part of such activities, the Parties shall, upon the request of either Party,
seek the advice of an independent Third Party patent counsel mutually acceptable
to the Parties. If the Parties are unable to agree upon an appropriate course of
action within ninety (90) days of conferring regarding the same, then Schering
shall have the right to terminate this Agreement upon written notice to PTC;
provided, that, if, within ten (10) days of receiving such written notice PTC
notifies Schering in writing that it intends to obtain an Unqualified Blocking
Opinion with respect to such Blocking Patent, then such written notice of
termination by Schering shall not be effective until the earlier of (i) ninety
(90) days from the date of PTC's notice, or (ii) the date PTC informs Schering
it is unable to obtain such Unqualified Blocking Opinion; and provided, further,
if PTC obtains an Unqualified Blocking Opinion within such ninety (90) day
period, then Schering shall have no right to terminate this Agreement pursuant
to this Section 11.5(b). In the event of a termination under this Section
11.5(b), the provisions of Section 11.7 shall be applicable. For the purposes of
this Agreement, "Unqualified Blocking Opinion" means an opinion concluding that
there is not [**] would find that the activities of the Parties pursuant to this
Agreement with respect to a Highly Active Collaboration Compound would infringe
[**], and such opinion [**].


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                                                               EXECUTION VERSION

      11.6  Early Termination of Research Program.

            (a) Termination of Certain Provisions for Triggering Event. In the
event that a Competitor, either alone or together with its Affiliates, acquires,
directly or indirectly, fifty percent (50%) or more of the voting stock of PTC
or any of its Affiliates, or all or substantially all of the assets of PTC or
its Affiliates related to the PTC Patents and PTC Know-How, whether through
merger, consolidation, acquisition or otherwise, or in the event that PTC or any
of its Affiliates engages in the Research, Development or Commercialization of a
product for the treatment of HCV (either alone or in collaboration with a Third
Party) other than pursuant to this Agreement (a "PTC Triggering Event"),
Schering shall have the right to terminate the provisions of Article 3 upon
written notice to PTC; provided, however, in the event that such PTC Triggering
Event occurs prior to the end of the Research Term, then the termination of
Article 3 pursuant to this Section 11.6(a) shall not apply to the JSC's
oversight and direction of the Research Program unless, following such
Triggering Event, PTC or its Affiliates continues to engage in the Research,
Development or Commercialization of a product for the treatment of HCV (either
alone or in collaboration with a Third Party). In the event that Schering
exercises its right to terminate the provisions of Article 3, then the following
additional provisions shall also terminate: Sections 4.3, 4.5, 4.6, 4.8,
4.10(c), PTC's participation rights under Sections 4.10(b) and Section 4.13. In
addition, should the PTC Triggering Event occur at any time prior to the
expiration of the Research Term, Schering shall also have the right to terminate
the Research Program upon sixty (60) days prior written notice to PTC.
Notwithstanding anything in this Section 11.6(a) to the contrary, a PTC
Triggering Event shall not include any internal PTC Research efforts not
undertaken through, or as part of, a collaboration or licensing arrangement with
a Third Party. For the avoidance of doubt, subcontracting to perform aspects of
PTC's internal Research efforts on behalf of PTC shall not be deemed to be a
collaboration or licensing arrangement with a Third Party.

            (b) Effect of Terminating the Research Program. Upon termination of
the Research Program by Schering pursuant to Section 11.6(a), PTC shall promptly
provide to Schering copies of all data, reports, records and materials in PTC's
or its Affiliates possession or Control that relate to Collaboration Compounds
or the Research Program to the extent not previously provided to Schering. The
provision to Schering of the foregoing copies shall not be deemed to create any
additional rights or licenses in any such copies or the intellectual property
embodied therein, and Schering's rights to use or exploit such information and
rights shall be solely as expressly granted by PTC to Schering in Article 5 and,
with respect to Joint Know-How or Joint Patents, those rights of Schering as a
joint owner. Upon such termination, (x) all of PTC's obligations under Article 2
(excluding Sections 2.6, 2.7 and 2.10) shall immediately terminate, (y) the
following provisions shall terminate: Article 3, and Sections 4.3, 4.5, 4.6,
4.8, 4.10(c), and PTC's participation rights under Sections 4.10(b), and (z) the
Research Term shall terminate. For clarity, Schering's exercise of its rights
under this Section 11.6 shall not terminate any other rights (including without
limitation the licenses granted to Schering or PTC or their respective
Affiliates pursuant to Sections 5.2, 5.3, 5.4 and 5.5 hereof) or obligations of
the Parties (including without limitation either Party's obligations pursuant to
Article 6 hereof) under this Agreement.

      11.7 Consequences of Certain Terminations by the Parties. In the event
this

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                                                               EXECUTION VERSION

Agreement is terminated by Schering pursuant to Section 11.2 or 11.5(b), or by
PTC pursuant to Section 11.3 or 11.4, then:

            (a) Schering's rights under the licenses granted to it pursuant to
Sections 5.1(a), 5.1(b) and 5.2 shall terminate. In the case of a termination by
PTC pursuant to Section 11.3 that does not relate to a Schering Non-Viral
Product, Schering's license under Section 5.3 shall terminate, but Schering's
licenses under Section 5.4 shall survive for any Designated NV Compounds as of
the termination date. In the case of a termination by PTC pursuant to Section
11.3 that relates to a Schering Non-Viral Product, Schering's licenses under
Sections 5.3 and 5.4 shall terminate;

            (b) Schering shall, at the election of PTC, grant PTC the following
rights and licenses:

                  (i) an exclusive, worldwide license, with the right to grant
      sublicenses, under any Schering Patents and Schering Know-How existing at
      the time of termination which claim or constitute Program Inventions, or
      for which sufficient support exists in the written descriptions of such
      Schering Patents to support such a claim and there is an ability to
      prosecute such a claim (the "Schering Termination IP"), solely to Develop,
      make, have made, use, import, offer to sell and sell Schering Viral
      Products in the Field;

                  (ii) an exclusive, worldwide license, with the right to grant
      sublicenses, under any Schering Patents existing at the time of
      termination (excluding Schering Termination IP) which claim the
      composition of matter or method of using a Highly Active Collaboration
      Compound or Schering Field NV Compound that is being Developed in humans
      or Commercialized by Schering or its Affiliates as of the Termination Date
      (a "Terminated Compound") solely to Develop, make, have made, use, import,
      offer to sell and sell Schering Viral Product in the Field; and

                  (iii) an exclusive, worldwide license, with the right to grant
      sublicenses, under any Schering Patents and Schering Know-How existing at
      the time of termination (excluding Schering Termination IP) which (a) is
      being utilized for a Terminated Compound, and (b) is not within the scope
      of the license grant in Section 11.7(b)(ii), solely to Develop, make, have
      made, use, import, offer to sell and sell in the Field: (A) the specific
      formulations of Schering Viral Products that are then in clinical
      Development or are being Manufactured or Commercialized by Schering and
      its Affiliates as of the effective date of the termination (the
      "Termination Date"), and (B) any other formulations of such Schering Viral
      Products which differ from the foregoing specific formulations only with
      respect to the quantity or concentration of active ingredient contained
      therein or the quantity or concentration of any of the excipients
      contained in such specific formulations; provided, however, it is
      understood that the provisions of this Section 11.7(b)(iii)(B) shall not
      apply to any Schering Viral Product which includes different excipients or
      active ingredients from those contained in the foregoing specific
      formulations or which utilizes any proprietary Schering drug delivery or
      formulation technology that has not been applied to the foregoing specific


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                                                               EXECUTION VERSION

      formulations. For the avoidance of doubt, the license granted pursuant to
      this Section 11.7(b)(iii) shall not include (x) except as expressly
      provided in Section 11.7(b)(iii)(B), the right to utilize any Schering
      Patents or Schering Know-How to Develop or Commercialize any formulations
      of Schering Viral Products that differ from the specific formulations that
      are then in clinical Development or are being Manufactured or
      Commercialized by Schering and its Affiliates as of the Termination Date,
      or (y) the right to utilize any Patents that are Controlled by Schering
      that are not part of the Schering Patents.

      In the event a termination is limited to a specific country or group of
      countries, then the licenses granted to PTC pursuant to this Section 11.7
      shall be limited to such country or group of countries. PTC may specify
      which portions of the Schering Intellectual Property it wishes to license
      under this Section 11.7(b).

            (c) Schering shall reasonably cooperate with PTC in order to enable
PTC to assume the Development, Manufacture and/or Commercialization of all
Schering Viral Products then being Manufactured, Commercialized or in clinical
Development by Schering. Such cooperation and assistance shall be provided in a
timely manner (having regard to the nature of the cooperation or assistance
requested) and shall include without limitation:

                  (i) Schering shall transfer to PTC (or its nominee) all INDs
      and NDAs made or obtained by Schering or its Affiliates to the extent
      relating to the Terminated Compounds. Furthermore, Schering agrees that it
      will not thereafter exercise any rights under an agreement with a Third
      Party for the purpose of precluding PTC from referencing a Drug Master
      File controlled by such Third Party that is related to such a Terminated
      Compound and, to the extent Schering's consent is required in order to
      reference such Drug Master File, Schering hereby agrees to provide PTC
      with such consent.

                  (ii) Schering shall transfer to PTC (or its nominee), to the
      extent not previously provided, a copy of all Development Data in its
      possession or under its control relating to any Schering Viral Product
      then being Commercialized or in clinical Development by Schering and
      reasonably necessary or useful for its continued Development and/or
      Commercialization, including without limitation all such information
      contained in Schering's regulatory and/or safety databases, all in the
      format then currently maintained by Schering; provided, however, nothing
      in this Section 11.7(c)(ii) shall be deemed to expand the scope of the
      licenses or other rights granted to PTC pursuant to Section 11.7(b).

                  (iii) Schering shall grant a worldwide, royalty-free exclusive
      license to PTC, at PTC's request, to all trademarks and associated trade
      names and trade dress (together with the goodwill associated therewith)
      then being used on or in connection with the Schering Viral Products,
      provided that Schering shall not be obligated to license any trademarks,
      trade names or trade dress that include the words "Schering" or the name
      of any other Schering Affiliate, or any other words or marks used in
      connection with other drug products sold by Schering or its Affiliates;
      provided further that such license shall be limited solely for use in
      connection with Schering Viral Products.


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                                                               EXECUTION VERSION

                  (iv) (1) Schering's rights under Section 9.3(b) shall
      terminate (except, in the case of a termination pursuant to Section 11.2
      or 11.4, the last two sentences of Section 9.3(b)), (2) PTC shall assume
      primary responsibility for preparing, filing, prosecuting, handling of
      interferences and maintaining Joint Patents under Section 9.3(c), and
      Schering shall have the same right of consultation related to Joint
      Patents as PTC has under Section 9.3(c), (3) PTC shall thereafter be
      solely responsible for all costs and expenses related to the preparation,
      filing, prosecution, handling of interferences and maintaining of the PTC
      Patents (excluding Joint Patents), (4) Schering's right to enforce Third
      Party infringement of certain Collaboration Patents under Section 9.6(b)
      shall terminate (excluding, in the case of a termination pursuant to
      Section 11.2 or 11.4, the PTC NV Patents), (5) Schering's rights and
      obligations with respect to infringement claims by Third Parties under
      Section 9.7(a) shall terminate, (6) Schering's rights with respect to the
      listing of Patents relating to Schering Viral Products under Section 9.9
      shall terminate, and PTC shall have equivalent rights with respect to such
      listings, (7) PTC shall have a right to consult with Schering with respect
      the prosecution of any Schering Patents that are licensed to PTC pursuant
      to Section 11.7(b), (8) PTC shall have "march-in" rights with respect to
      the enforcement of the Schering Patents that are licensed to PTC pursuant
      to Section 11.7(b)(i) or (ii) against Third Party infringers that are
      comparable in scope to the rights it has with respect to the Collaboration
      Patents pursuant to Section 9.6(d), and Schering shall have the
      obligations of the non-prosecuting Party, but only to the extent that the
      alleged Third Party infringer is Commercializing a product that competes
      with a Schering Viral Product that is licensed to PTC pursuant to Section
      11.7(b), and (9) to the extent that PTC exercises its "march-in" rights
      pursuant to Section 11.7(c)(iv)(8), the provisions of Section 9.6(g)(ii)
      shall be applicable, but only to the extent such recovery relates to an
      infringer that is Commercializing a product that competes with a Schering
      Viral Product that is licensed to PTC pursuant to Section 11.7(b), (10)
      PTC shall have "march-in" rights with respect to the enforcement of the
      Schering Patents that are licensed to PTC pursuant to Section 11.7(b)(iii)
      against Third Party infringers that are comparable in scope to the rights
      it has with respect to the Collaboration Patents pursuant to Section
      9.6(d), but only to the extent that the alleged Third Party infringer is
      Commercializing a product that competes with a Schering Viral Product that
      is licensed to PTC pursuant to Section 11.7(b); provided, however, that
      such right shall not be applicable with respect to any such Schering
      Patent which also claims the composition of matter or method of use of any
      compound that is the subject of an active Research, Development or
      Commercialization program by Schering or its Affiliates or licensees.

                  (v) Schering shall grant PTC a worldwide, royalty-free
      non-exclusive license, including the right to grant sublicenses, to
      Patents and Know-How Controlled by Schering or its Affiliates which are
      necessary or useful for the Manufacture of a Terminated Compound, solely
      for the purpose of Manufacturing (or having Manufactured) such Terminated
      Compound.

                  (vi) If, as of the Termination Date, Schering its Affiliates
      or Sublicensee is engaged in the Manufacture of any Schering Viral Product
      that is then in clinical Development or is being Commercialized, then
      Schering, its Affiliates or Sublicensees must, as requested by PTC, use
      commercially reasonable efforts to

                                       66
<PAGE>
                                                               EXECUTION VERSION

      Manufacture and supply PTC's requirements for the Schering Viral Product
      until the earlier of (i) such time as PTC can secure an alternative
      Manufacturing source reasonably satisfactory to PTC, or (ii) [**] from the
      Termination Date. In addition, at PTC's option, as of the Termination Date
      (A) Schering shall permit PTC to purchase all or any part of Schering's
      worldwide unsold inventory of raw materials and work-in-process for
      Schering Viral Products, and (B) at PTC's request and expense, but only to
      the extent within Schering's control, Schering shall transfer to PTC, or
      PTC's designee, or arrange to have transferred, any methods, standards, or
      other Manufacturing related data and information for Schering Viral
      Products, and (C) Schering shall use its commercially reasonable efforts
      to assign to PTC any Third Party Manufacturing contract relating to the
      Schering Viral Products to which Schering or any of its Affiliates is a
      party; provided, however, it is understood that Schering shall not be
      obligated to pay any compensation to the Third Party, or incur any
      unreimbursed expenses, in order to obtain such assignment; provided,
      further that, if Schering is unable to assign to PTC any such Third Party
      Manufacturing contract, the obligation to use commercially reasonable
      efforts to assign such contract shall be deemed to be satisfied if
      Schering notifies PTC of such non-assignability and continues to supply
      PTC's requirements for Schering Viral Product for [**] from the
      Termination Date. All Schering Viral Product supplied to PTC by Schering
      shall be supplied at a price equal to Schering's fully absorbed cost of
      Manufacture, plus a markup of [**] percent ([**]%).

            (d) With respect to any Third Party License Agreements related to
Schering Viral Products to which Schering is a party, Schering shall provide PTC
with copies of such agreements (subject to any applicable confidentiality
restrictions) and PTC shall notify Schering in writing within [**] of receipt of
such copies whether it wishes Schering to attempt to obtain an assignment or
sublicense to PTC of Schering's rights under the applicable Third Party License
Agreements. In the event PTC wishes Schering to attempt to obtain such an
assignment or sublicense, then Schering shall use reasonable and diligent
efforts to effect the same (it being understood that Schering shall have no
obligation to pay any compensation to the Third Party, or to incur any
unreimbursed expense, in order to obtain such assignment or sublicense and shall
have no liability to PTC in the event such assignment or sublicense is not
obtained despite such efforts) and PTC shall thereafter be responsible for
paying any royalties, fees or other consideration due to the Third Party
following the Termination Date under the applicable Third Party License
Agreements. In the event PTC does not so notify Schering within the applicable
[**] period, then Schering shall have no further obligations to PTC with respect
to such Third Party License Agreements.

            (e) In partial consideration for the licenses granted to PTC
pursuant to Section 11.7(b) and 11.7(c), PTC shall pay to Schering on a
country-by-country and Schering Viral Product-by-Schering Viral Product basis,
royalties on the Net Sales of any Schering Viral Product by PTC, its Affiliates
or any Sublicensee. The applicable royalty rate shall be based on the stage of
Development at the time of the Termination Date and shall be determined as
follows:

                  (i) [**]:


                                       67
<PAGE>
                                                               EXECUTION VERSION

<Table>
<Caption>
                                                                           Rate
                                                                           ----
                          Net Sales
                          ---------
<S>                                                                      <C>
On the first [**] Dollars ($ [**]) in worldwide Net Sales of             [**]
such Schering Viral Product in a calendar year                           percent
                                                                         ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than one [**]                   [**]
Dollars ($ [**]) in a calendar year                                      percent
                                                                         ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) in a calendar year                       percent
                                                                         ([**]%)
</Table>

                  (ii)  [**]:

<Table>
<Caption>
                                                                           Rate
                                                                           ----
                          Net Sales
                          ---------
<S>                                                                      <C>
On the first [**] Dollars ($ [**]) in worldwide Net Sales of             [**]
such Schering Viral Product in a calendar year                           percent
                                                                         ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) but less than [**] Dollars ($            percent
[**]) in a calendar year                                                 ([**]%)

On worldwide Net Sales of such Schering Viral Product in                 [**]
excess of [**] Dollars ($ [**]) in a calendar year                       percent
                                                                         ([**]%)
</Table>

provided, however, (x) in the event the Agreement is terminated by PTC pursuant
to Section 11.3, the royalties payable by PTC pursuant to this Section 11.7(e)
shall be at a rate which is [**] percent ([**]%) of the rate that would
otherwise be payable by PTC pursuant to the royalty schedule specified above,
and (y) in the event PTC terminates this Agreement due to a breach by

                                       68
<PAGE>
                                                               EXECUTION VERSION

Schering of Section 2.10 then no royalty shall be payable by PTC pursuant to
this Section 11.7(e).

Any royalties payable pursuant to this Section 11.7(e) shall be payable for a
period from the date of First Commercial Sale of such Schering Viral Product by
PTC or its Affiliates or licenses in the applicable country until the later of
(i) expiration of the last to expire PTC Patent (including any Joint Patent)
which claims an invention Invented prior to the Termination Date or Schering
Patent in such country which contains a Valid Claim which claims such Schering
Viral Product or its use in the Field, or (ii) the expiration of any Marketing
Exclusivity for such Schering Viral Product in such country (or, if earlier, the
date of the First Commercial Sale of a Third Party product in such country that
contains, as one of its active ingredients, the same Active Ingredient that is
contained in the Schering Viral Product). The provisions of Sections 6.5(e),
6.6, 6.7(b), 6.8, and 9.7(a) shall apply, mutatis mutandis, to the payment of
royalties under this Subsection 11.7(e).

            (f) (i) In the event of a termination by PTC pursuant to Section
      11.3, (A) the license granted to PTC pursuant to Section 5.1(c) shall
      terminate; (B) the licenses granted or to be granted to PTC pursuant to
      Section 5.4(b) shall survive, (C) the license granted to PTC pursuant to
      Section 5.3(b) shall convert from a co-exclusive license to an exclusive
      (even as to Schering) license, and (D) the provisions of Sections 6.7(d),
      6.7(e), 6.7(f), and 6.9 through and including 6.17 shall continue to apply
      with respect to PTC's Development and Commercialization of PTC Products
      and Schering's Development and Commercialization of Schering Non-Viral
      Products.

                  (ii) In the event of a termination by Schering pursuant to
      Section 11.2 or 11.5(b), or by PTC pursuant to Section 11.4, (A) the
      license granted to PTC pursuant to Section 5.1(c) shall terminate, (B) the
      licenses granted or to be granted to PTC pursuant to Sections 5.3(b) and
      5.4(b) shall survive; (C) the licenses granted or to be granted to
      Schering pursuant to Sections 5.3(a) and 5.4(a) shall survive, and (D) the
      provisions of Sections 6.7(d), 6.7(e), 6.7(f), and 6.9 through and
      including 6.17 shall continue to apply with respect to PTC's Development
      and Commercialization of PTC Products and Schering's Development and
      Commercialization of Schering Non-Viral Products.

      11.8  Consequences of Certain Terminations by Schering.

            (a) In the event Schering terminates this Agreement pursuant to
Section 11.3, then (i) PTC's rights under the licenses granted to it pursuant to
Section 5.1(c), 5.3(b) and 5.4(b) shall terminate (except for existing licenses
under Section 5.4(b) for PTC Designated NV Compounds unrelated to any PTC
breach) and the licenses granted to Schering pursuant to Section 5.3(a) shall
convert from co-exclusive licenses to exclusive (even as to PTC) licenses, (ii)
Schering's rights under Article 5 (including, without limitation, its rights
under the Schering Licenses) shall survive termination, (iii) the provisions of
Article 6 and Sections 4.1(d) and 4.7 shall continue to apply with respect to
Schering's Development and Commercialization of Licensed Products, and the
provisions of Sections 6.7(e), 6.7(f), and 6.10 through and including 6.17 shall
apply to PTC's Development and Commercialization of PTC Products, subject to
Section 11.9(a); provided, however in the case where Schering terminates
pursuant to Section

                                       69
<PAGE>
                                                               EXECUTION VERSION

11.3 and it has not accepted a Development Candidate by the Termination Date or
within six (6) months thereafter, (A) no Milestones shall be payable by Schering
pursuant to Sections 6.2(a) and 6.2(b), (B) the Milestones payable pursuant to
Sections 6.2(c), 6.2(d), 6.2(e) and 6.2(f) shall be reduced by [**] percent
([**]%), and (C) the royalty rates specified in Sections 6.5(a) and 6.5(b) shall
automatically be reduced by [**] percent ([**]%); provided further, in the event
Schering terminates this Agreement due to a breach by PTC of Section 2.10 then
no further payments shall be payable by Schering pursuant to Section 6.5.

            (b) In the event Schering terminates this Agreement pursuant to
Section 11.4, then (i) PTC's rights under the licenses granted to it pursuant to
Section 5.1(c) shall terminate, (ii) Schering's rights under Article 5
(including, without limitation, its rights under the Schering Licenses) shall
survive termination, (iii) the provisions of Article 6 and Sections 4.1(d) and
4.7 shall continue to apply with respect to Schering's Development and
Commercialization of Licensed Products, subject to Section 11.9(a), (iv) the
licenses granted to PTC pursuant to Sections 5.3(b) and 5.4(b) shall survive and
the provisions of Sections 6.7(e), 6.7(f), and 6.10 through and including 6.17
shall continue to apply with respect to PTC's Development and Commercialization
of PTC Products.

      11.9  Effect of Termination and Expiration.

            (a) Accrued Rights and Obligations. Termination of this Agreement
for any reason shall not release either Party hereto from any liability which,
at the time of such termination, has already accrued or which is attributable to
a period prior to such termination nor preclude either Party from pursuing any
rights and remedies it may have hereunder or at Law or in equity with respect to
any breach of this Agreement. It is understood and agreed that monetary damages
may not be a sufficient remedy for any breach of this Agreement and that the
non-breaching Party may be entitled to seek injunctive relief as a remedy for
any such breach.

            (b) Stock on Hand. In the event this Agreement is terminated for any
reason, Schering or PTC, as the case may be, shall have the right to sell or
otherwise dispose of the stock of any Licensed Product then on hand or in
process until the first anniversary of the effective date of such termination.
Sales made pursuant to this Section 11.9(b) shall be treated as Net Sales and
any royalty otherwise payable on such Net Sales absent such termination thereon
shall be paid to the applicable Party.

      11.10 Survival.

            (i) The rights and obligations set forth in this Agreement shall
extend beyond the term or termination of this Agreement only to the extent
expressly provided for herein, or to the extent that the survival of such rights
or obligations are necessary to permit their complete fulfillment or discharge.
Without limiting the generality of the foregoing, it is agreed that the
provisions of Sections 4.4, 5.7, 5.8, 6.12 through 6.17, as well as Articles 1,
7, 10, 11, 12 and 13, shall survive expiration or termination of this Agreement
for any reason.

            (ii)  In addition, the following Sections will explicitly survive
as follows:

                                       70
<PAGE>
                                                               EXECUTION VERSION

                  (A) Article 9 shall survive expiration or termination of this
      Agreement for any reason, subject to the restrictions and modifications
      set forth in Section 11.7;

                  (B) Article 4A shall survive expiration or termination of this
      Agreement for any reason, except that a Party's right to continue to
      designate NV Compounds under Section 4A.1 will terminate in the event that
      such Party's co-exclusive Research license under Section 5.3 terminates;

                  (C) Section 2.14 shall survive expiration or termination of
      this Agreement for any reason, except that (1) Section 2.14 shall
      terminate in the event that the Parties agree to terminate the Agreement
      pursuant to Section 11.5(a) or Schering's co-exclusive Research license
      under Section 5.3 terminates, and (2) Section 2.14(ii) shall terminate in
      the event that Schering's exclusive Development and Commercialization
      license under Section 5.2 terminates.

            (iii) Further, each of Sections 11.2, 11.3, 11.4, 11.5, 11.7 and
11.8 set forth specific additional provisions in this Agreement that will
survive in the event of a termination under Section 11.2, 11.3, 11.4 or 11.5.

                                   ARTICLE 12

                               DISPUTE RESOLUTION

In the event of any controversy or claim arising out of or relating to this
Agreement, or the rights or obligations of the Parties hereunder (other than
those to be resolved pursuant to the provisions of Sections 1.40, 3.5 and 9.1),
the Parties shall first try to settle their differences amicably between
themselves. Either Party may initiate such informal dispute resolution by
sending written notice of the dispute to the other Party, and within thirty (30)
days after such notice appropriate representatives of the Parties shall meet for
attempted resolution by good faith negotiations. If such representatives are
unable to resolve promptly such disputed matter within the said thirty (30)
days, either Party may refer the matter by written notice to the Senior
Vice-President, Research and Development of Schering-Plough Corporation or his
or her designee and the Senior Vice President, Drug Discovery Technologies of
PTC or his or her designee for discussion and resolution. If such individuals or
their designees are unable to resolve such dispute within thirty (30) days of
such written notice, either Party may refer the matter by written notice to the
President, Global Prescription Business of Schering-Plough Corporation and the
CEO of PTC. If such individuals are unable to resolve such dispute within thirty
(30) days of such written notice, either Party may initiate litigation in
accordance with the provisions of Section 13.1.

                                   ARTICLE 13

                                  MISCELLANEOUS


                                       71
<PAGE>

                                                               EXECUTION VERSION

        13.1 Governing Law. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with the laws of State of New York, without regard for its conflicts
of laws rules; provided that the Parties' rights and obligations under Section
9.1 shall be governed by the intellectual property laws of the United States and
provided further with respect to matters involving enforcement of intellectual
property rights, the Laws of the applicable country in question shall be
applicable. The provisions of the United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this Agreement or any subject
matter hereof or thereof.

         13.2 Independent Contractors. The relationship of the Parties hereto is
that of independent contractors. It is expressly agreed that for tax, legal or
other purposes (i) this Agreement or any portion of this Agreement shall not be
considered to be a partnership agreement, and (ii) the relationship between the
two Parties shall not constitute a partnership, joint venture or agency. Neither
PTC nor Schering shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the other Party to do so.

         13.3 Assignment. Either PTC or Schering may assign its rights and
obligations under this Agreement to any Affiliate, provided such interest shall
be retransferred to the assigning Party if such entity ceases to be an Affiliate
of such Party, and provided further that the assigning Party shall guarantee the
performance of such Affiliate. Neither Party may assign this Agreement to any
Third Party hereto without the written consent of the other Party, which consent
shall not be unreasonably withheld or delayed; except either Party may assign
this Agreement, without such consent, to an entity that acquires all or
substantially all of its assets relating to its antiviral business, whether by
merger, reorganization, acquisition, sale, or otherwise. This Agreement shall be
binding upon and inure to the benefit of the Parties and their successors and
assigns.

         13.4 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail,
return receipt requested, postage prepaid, in each case to the respective
address specified below, or such other address as may be specified in writing to
the other Party hereto:

If to PTC:                                 If to Schering:

PTC Therapeutics, Inc.                     Essex Chemie AG
100 Corporate Court                        Topferstrasse 5
South Plainfield, New Jersey 07080         6000 Lucern 6
USA                                        Switzerland
Attention: Legal Department                Attention: General Manager
Facsimile No.: 1-908-222-1128              Facsimile No.: 011 41 418 16 26

and an email copy to:

legal@ptcbio.com

                                       72

<PAGE>

                                                               EXECUTION VERSION

With a copy to:                            With a copy to:

Wilmer Cutler Pickering Hale & Dorr LLP    Schering Corporation
60 State Street                            2000 Galloping Hill Road
Boston, Massachusetts 02109                Kenilworth, New Jersey 07033-0530
USA                                        USA
Attention: Steven D. Singer, Esq.          Attention:  Law Department,
Facsimile No. 1-617-526-6000               Senior Legal Director, Licensing
                                           Facsimile No.:  1-908-298-5310

         13.5 Force Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses (except for payment obligations)
on account of failure of performance to the extent such failure or delay is
caused by or results from causes beyond the reasonable control of the affected
Party and is not caused by the negligence, or willful misconduct of the
non-performing Party; provided, however, the non-performing Party has exerted
all reasonable efforts to avoid or remedy, and minimize the duration of, such
event of force majeure; provided, further that in no event shall a Party be
required to settle any labor dispute or disturbance. Each Party shall provide
the other Parties with prompt written notice of any delay or failure to perform
that occurs by reason of force majeure.

         13.6 Advice of Counsel. PTC and Schering have each consulted counsel of
their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one Party or another
and will be construed accordingly.

         13.7 Further Assurances. At any time or from time to time on and after
the date of this Agreement, either Party shall at the request of the other Party
hereto (i) deliver to the requesting Party any records, data or other documents,
(ii) execute, and deliver or cause to be delivered, all such consents, documents
or further instruments of transfer or license, and (iii) take or cause to be
taken all such actions, as the requesting Party may reasonably deem necessary in
order for the requesting Party to obtain the full benefits of this Agreement and
the transactions contemplated hereby; in each case, consistent with the
provisions of this Agreement.

         13.8 Severability. When possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable Law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable Law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement. The Parties shall make a good faith effort to replace the invalid or
unenforceable provision with a valid one that in its economic effect is most
consistent with the invalid or unenforceable provision.

         13.9 Waiver. It is agreed that no waiver by either Party hereto of any
breach of default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.

         13.10 Complete Agreement. The Parties agree that this Agreement, with
its Schedules, constitutes the entire agreement, both written and oral, between
the Parties with respect to the

                                       73

<PAGE>

                                                               EXECUTION VERSION

subject matter hereof, and that all prior agreements respecting the subject
matter hereof, including the confidentiality agreements referenced in Section
7.6, either written or oral, expressed or implied, are merged and canceled, and
are null and void and of no effect. No amendment or change hereof or addition
hereto shall be effective or binding on either of the Parties hereto unless
reduced to writing and duly executed on behalf of both Parties.

         13.11 Use of Name. Neither Party shall use the name or trademarks of
the other Party without the prior written consent of such other Party except in
connection with the disclosure of the existence of this Agreement.

         13.12 Headings. The captions to the several Sections and Articles
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.

         13.13 Third Party Beneficiaries. No person or entity other than PTC,
Schering or their respective Affiliates and permitted assignees hereunder shall
be deemed an intended beneficiary hereunder or have any right to enforce any
obligation of this Agreement.

         13.14 Consequential Damages. UNLESS RESULTING FROM A PARTY'S WILLFUL
MISCONDUCT, NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS
RIGHTS OR PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, INCLUDING WITHOUT LIMITATION
LOST PROFITS, ANTICIPATED PROFITS, LOST GOODWILL, LOST REVENUE, LOST PRODUCTION,
LOST CONTRACTS AND LOST OPPORTUNITY, ARISING FROM OR RELATING TO ANY BREACH OF
THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS
SECTION 13.14, HOWEVER, IS INTENDED TO LIMIT OR RESTRICT ANY PAYMENT OBLIGATION
OR THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY. NOTWITHSTANDING
THE FOREGOING, NOTHING IN THIS AGREEMENT LIMITS OR EXCLUDES ANY PARTY'S
LIABILITY FOR FRAUD OR FOR DEATH OR PERSONAL INJURY CAUSED BY THAT PARTY'S OWN
NEGLIGENCE OR WILLFUL MISCONDUCT.

         13.15 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and which together shall constitute
one instrument.

                [Remainder of this page intentionally left blank]

                                       74

<PAGE>

                                                               EXECUTION VERSION

         IN WITNESS WHEREOF PTC and Schering have executed this Agreement by
their respective duly authorized representatives.


PTC THERAPEUTICS, INC.                    ESSEX CHEMIE AG


By:      /s/ Stuart Peltz                 By:      /s/ P. Th. Klaassen
    --------------------------------          ----------------------------------

Print Name:       Stuart Peltz            Print Name:       P. Th. Klaassen
            ------------------------                  --------------------------

Title:     President & CEO                Title:            Director
         ---------------------------             -------------------------------

                                       75

<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.14

                       CRITERIA FOR DEVELOPMENT CANDIDATES

<TABLE>
<CAPTION>
Assay                                                     Result
<S>                                                       <C>
[**]                                                      [**]
[**]                                                      [**]
                                                          [**]
                                                          [**]
[**]                                                      [**]

[**]
[**]
[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
[**]

[**]                                                      [**]
[**]                                                      [**]
                                                          [**]

[**]                                                      [**]
[**]
[**]

[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
[**]
[**]
[**]


[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
                                                          [**]

[**]                                                      [**]
[**]                                                      [**]
[**]                                                      [**]
[**]
</TABLE>

<PAGE>

                                                               EXECUTION VERSION

<TABLE>
<CAPTION>
Assay                                                     Result
<S>                                                       <C>
[**]                                                      [**]
[**]                                                      [**]

[**]
[**]                                                      [**]
[**]                                                      [**]

[**]                                                      [**]
[**]

[**]                                                      [**]
[**]
[**]
</TABLE>


<PAGE>

                                                               EXECUTION VERSION
                                 SCHEDULE 1.47A

                 PTC BACKGROUND PATENTS AS OF THE EFFECTIVE DATE


[**]

UNITED STATES
         US Application No. [**]

INTERNATIONAL

         PCT Publication No. [**]   Canadian Application No. [**]
                  European Application No. [**]

                                                                            [**]
UNITED STATES
US Publication No. [**]INTERNATIONAL
         PCT Application No. [**]

*See also Schedule 1.82 for Third Party License Agreements.

<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.48

                     PTC COMPOUNDS AS OF THE EFFECTIVE DATE


                                   [Attached]


<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.53

                      PTC PATENTS AS OF THE EFFECTIVE DATE

     [**]
UNITED STATES
US Application No. [**]INTERNATIONAL
         PCT Application No. [**]

     [**]
UNITED STATES
         US Application No. [**]
         US Provisional Application No. [**]
         US CIP Application No. [**]

INTERNATIONAL
PCT Application No. [**]

<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.60

                                  RESEARCH PLAN
OVERVIEW

[**]
PTC THERAPEUTICS ACTIVITIES:

<TABLE>
<CAPTION>
AREA        FTE    ACTIVITIES
<S>         <C>    <C>
[**]        [**]    [**]
[**]        [**]             [**]
[**]        [**]    [**]
Total       [**]
</TABLE>

SCHERING-PLOUGH ACTIVITIES

[**]
[**]
<PAGE>

APPENDIX
[**]

[Chart describing screening tier studies]

<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.65

              SCHERING BACKGROUND PATENTS AS OF THE EFFECTIVE DATE


                                      [**]

<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.67

                   SCHERING COMPOUNDS AS OF THE EFFECTIVE DATE


                                      [**]

<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 1.82

                     EXISTING THIRD PARTY LICENSE AGREEMENTS


Schering's Existing Third Party License Agreements

[**]

PTC's Existing Third Party License Agreements

[**]


<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 2.11

                             APPROVED SUBCONTRACTORS


THE FOLLOWING WILL ONLY BE DEEMED APPROVED SUBCONTRACTORS FOR A PERIOD OF THREE
(3) MONTHS FOLLOWING THE EFFECTIVE DATE, TO ALLOW FOR TRANSITION OF THEIR
ASSIGNED WORK TO PTC FTES:

[**]


<PAGE>

                                                               EXECUTION VERSION

                                  SCHEDULE 7.5

                CONTENTS OF EXECUTION ANNOUNCEMENT PRESS RELEASE


<PAGE>

                                                               EXECUTION VERSION

                                 SCHEDULE 8.4(C)

                   PTC AGREEMENTS RELATED TO THE PTC COMPOUNDS

[**]